Between 1929 and 1932, as the international demand for raw materials plummeted during the Depression, the value of Mexican exports declined from $274 million to $96.5 million. Since the government was heavily reliant on export taxes, tax receipts fell from 231 million pesos to 155 million during the same period. In 1932, Mexico’s gross domestic product (GDP) was 24 percent below its 1926 peak.11
The Depression resulted in massive job loss, plus the return of hundreds of thousands of Mexicans who had been working in the United States. However, the impact of the Depression was limited since only 3 percent of the non-rural labor force worked in oil and mining, the sectors that produced 65 percent of exports. The Depression also had limited impact on the large number of people engaged in subsistence agriculture.12
Beginning in 1931, to stimulate the economy the government sharply increased its spending and the money supply. To fill the void left by the lack of foreign credit and investment, in 1934 the Nacional Financiera, a government investment bank, began issuing bonds to finance agricultural and industrial projects.13
Higher government spending and an increase in oil and silver prices aided Mexico’s recovery from the Depression. In addition, 1933 was a good crop year. Between 1932 and 1935, as traditional foreign markets recovered from the Depression, Mexico’s exports doubled in value.14
Throughout Latin America, as a result of the Depression, the volume and price of exports declined and the large influx of foreign investment ceased. The new development strategies created in response to the Depression emphasized greater state intervention in the economy and a focus on the domestic market.15
World History
