CONCLUSION

Between 1877 and 1910, Mexico’s per capita income (expressed in 1950 U. S. dollars) increased from $62 to $132. From 1860 to 1910, Mexico’s rate of per capita economic growth exceeded that of such economic powers as France, Germany, and Great Britain. This economic growth resulted from: 1) railroads lowering transport costs, 2) political stability, and 3) banks supplying credit to both private interests and the government. Between 1877 and 1910, federal government revenue increased by 437 percent, while the population only increased by 60 percent.135

Mexico’s exports were too low to lift the whole economy, as occurred in Argentina, Latin America’s star economic performer. In 1890, Mexico exported $4.40 per capita, while Argentina exported $32.40 per capita. In addition, Mexico’s exports generated relatively few jobs and had limited links to other sectors of the economy. Exports were often generated in rather small enclaves, such as mines. In contrast, Argentina’s agriculture - and cattle-based exports were more closely integrated to the rest of the economy. Cattle raising, for example, generated jobs in processing meat for export and in the leather, shoe, and chemical industries.136

The government’s failure to invest in educating the labor force prevented sustained economic growth. In the short term, this kept taxes low and made enterprises profitable. However, in the long term it choked off development by denying Mexico a skilled labor force that could absorb technical innovation from advanced countries and produce manufactured exports.137

While Mexico had no clear alternatives to the acceptance of foreign investment, such investment could have been more effectively regulated. The elite rationalized the virtual carte blanche given to foreign investors as a necessary measure to attract foreign capital. The experience of Brazil and Argentina, however, contradicted this. These two countries not only had more nationalistic investment policies but also received more British investment than Mexico during the Porfiriato.138

While some statistics paint a positive picture of the Porfiriato, others indicate the opposite. Mexico failed to break out of the colonial development model. As late as 1910, three metals— gold, silver, and copper—comprised almost three-fifths of Mexico’s exports. That year, 67 percent of the labor force remained in the primary sector (agriculture, cattle, forestry, hunting, and fishing).139

At the end of the Porfiriato, the roughly $2 billion of foreign investment denied Mexicans control of mining, oil, banking, commerce, public utilities, cattle ranching, and railroads (until their nationalization). This led historian James Cockcroft to conclude, “The single most influential economic group was neither a rural aristocracy nor an urban bourgeoisie, but rather a foreign bourgeoisie.” Foreign capital also generated wealth that fell into the hands of the local elite, thus solidifying its position in power.140

Some problems that became apparent during the Porfiriato have yet to be adequately addressed. Factories, mines, and other extractive industries could not absorb the surplus of workers produced by land consolidation, population increase, and the declining need for artisans.141

Regional disparity increased during the Porfiriato. Electricity permitted the location of industry in Mexico City, rather than near sources of hydropower. Chihuahua, Sonora, Coahuila, and the Federal District alone received 86 per cent of foreign investment. Government investment was concentrated in Mexico City. This left many entire states with little benefit from Porfirian economic development. As historian Leticia Reina commented, “The majority of people were left out of the national project.”142

Tariff protection led to industrial investment since investors knew they would not have to compete with foreign goods at prevailing world prices. Since so many machines and components were imported and economies of scale were often lacking, Mexican production costs were higher than in the developed world. Consumers were the most obvious group hurt by tariffs as they paid nearly 70 percent more for manufactured goods than they would have if imports had been allowed to enter freely. The reliance on tariffs set the pattern for Mexican industrial development for most of the twentieth century and resulted in an industrial plant with high costs and low productivity.143

Diaz successfully broke the cycle of impoverished governments and coups by favoring a few banks, such as Banamex, with special privileges and restricted competition. While this allowed the government to obtain credit, the forty-two banks that existed in Mexico in 1910 were insufficient to meet credit needs. Operating under much less stringent rules, the United States had 18,723 banks and trust companies that year.144

A fatal flaw in the way Mexico based development on industrialization, commercialization of agriculture, and internationalization of capital was that the lower classes were denied returns to labor commensurate with the new wealth being created. As historian Mark Wasserman stated, “Mexico’s last and greatest civil war, the Mexican Revolution (1910—1920) was essentially a protest against this system.”145