Mexico's rulers—under internal and external pressures—turned to globalization and neoliberalism, culminating in the promises of NAFTA and democratization. For Mexico's majority, the social consequences, to date, have been declining incomes, widespread insecurities, the end of land reform, and accelerating migration to labor, seasonally or permanently, in the United States.
Leticia Reina, Elsa Servin & John Tutino, 2007202
The stagnation of Mexico’s GDP per capita is key to understanding the impact of neo-liberalism. In 1980, per capita GDP was $3,424. After remaining below that level until the late 1990s, per capita GDP reached $3,537 in 2000. Between 1983 and 2004, per capita GDP increased at an annual rate of only 0.3 percent. The lack of significant variation in per capita GDP could lead to increased social welfare if income distribution improved. However, just opposite has occurred, exacerbating social problems.203
Between 1984 and 1992, the share of income received by the top 10 percent of income earners increased from 34.2 percent of income to 40.5 percent. Income concentration remained largely unchanged during the 1990s. Between 1994 and 2003, non-maquiladora manufacturing wages declined, while productivity was up 24.7 percent. The owners of many mom-and-pop stores lost income as they were displaced by large-scale retail establishments such as Wal-Mart. The declining income of the rural poor, forced to compete with low-cost agricultural imports, also contributed to income concentration.204
The rapid expansion of the export sector further concentrated wealth. Some 700 firms, representing only 2 percent of all export-oriented firms, generated 80 percent of exports. Technologically sophisticated plants producing goods for export required an increasingly skilled labor force. As a result, between 1984 and 1995, the buying power of skilled workers increased by 8 percent, while that of unskilled workers decreased by 22 percent. Between 1991 and 2001, exports increased by more than 300 percent, but formal employment in the export sector increased by less than 50 percent.205
Employers in manufacturing, and especially the export sector, benefited as the value of wages declined thanks to the high rates of inflation and because increases in productivity were not matched
By increased compensation to workers whose productivity was rising. These factors contributed to the amount of wages in the economy falling from 35.7 percent of GDP in 1970 to 29.1 percent in 1996.206
By 2005, income distribution had only marginally improved, as the share of income going to the wealthiest 10 percent had declined to 36.5 percent. The next wealthiest 30 percent of the population received 36.8 percent of income, leaving the bottom 60 percent with only 26.7 percent. This maldistribution of wealth is reflected in the millions of young people joining the informal economy, resorting to crime, or emigrating. Economist Rosa Albina Garavito commented on how wealth came to be so poorly distributed:
Since salaries increased more slowly than prices, wealth has been concentrated. Similarly national wealth was transferred to private hands by privatizing public enterprises. Financial speculation has also concentrated wealth. As a result, Mexico is one of the world’s principal producers of personal fortunes, while at the same time it occupies some of the lowest positions in competitiveness, prosperity, and social welfare.207
As a result of these social and economic forces, whose impact far outweighed the government’s efforts to reduce poverty, Mexico is one of the most unequal countries in the world. According to a United Nations study on equality, Mexico only ranked 103rd of 126 nations in terms of equality.208
World History
