Mexico after World War II - Research Paper Example

Running head: Mexico after World War II Mexico after World War II [Writer’s Name] [Institution’s Name] Synopsis It was between the years 1938 and 1945 that Mexico progressed from a nation that had been very much divided over its revolutionary past to a community that had been united around its involvement in the Second World War. At first the reaction of the Mexicans to the war was ambivalently, with the government moving near to having a deal with the United States in the year of 1941. However, with the escalation of the Axis aggression, and later its culmination in attacks on Mexican oil tankers as well, there was the unification of the public behind the president. Manuel Avila Camacho, the Mexican president of that time, carefully merged the government’s wartime rhetoric with the official commercial agreements with the United States and made use of the Second World War for justifying his program of domestic industrialization. The Mexicans were urged by the government propaganda to meet their participatory revolutionary responsibilities and this they were to do so by giving support to the industrialization and by toiling for increasing the yield. Then there was the involvement of the Squadron 201 in Pacific combat missions which led to further unification of the nation around the war. By the year 1945 Camacho realized that there had arisen a demand for consumer goods by the middle and upper class people of the nation. He started capitalizing on this demand and he did so through imposition of protectionist measures for bringing about a reduction in the competition from the US industries. Resultantly, the government was able to attain a great deal of domestic support for its industrialization agenda. Mexico after World War II Introduction A lot of growth has been seen in the world trade in consumer durables, particularly following the Second World War, and this has been seen to occur mainly among the industrial countries, and not between the industrial and the developed worlds. Part of the reason for this has been that it is just the richer nations who can afford to buy the expensive durables. Another reason is the reduction or elimination of trade restrictions in the industrial nations following World War II and which led to specialization in those nations, which involved a lot of attention toward the refinements in styling and such qualitative variations in product, allowing for a higher proportion of trade to output (Rosenberg, 1982). Resultantly, the position of the markets for dear durables, together with the technical complications, high talent needs, plus the economies of scale that are frequently needed in their manufacture, have restricted the manufacture of these kind of goods to a small, though progressing, group of advanced nations. There has been a further reinforcement of such concentration because of the fact that those nations are as yet the locus of technological dynamism plus the new product innovation. Less developed nations A steady expansion of the less developed world into the manufacturing sector has been observed. There had been these kinds of undertakings even before the twentieth century and these had frequently been unsuccessful. The nations involved with this were those that are as yet thought to be less developed such as India, Mexico and Brazil (Rosenberg, 1982). This process, however, gained speed at the time of the two world wars, as during that time there had been a cut off of the supply of industrial products. After the Second World War ended we saw that there was a global struggle toward achieving improvement in the living standards in the developing nations. Initially it was not difficult to see the reasons behind there being underdevelopment; the nations that had been given independence recently and also the United Nations bodies and industrialized nations attempted at promoting the program and this they did so by making use of means such as introducing the know-how by means of assigning professionals, progressing in the education sector, developing the infrastructure, etc. This relates to the fact that they looked at the industrialized nations for developing. If we look back in time, we see that the first emerging industrialization procedure among the developing and undeveloped nations started by the end of the nineteenth century. This was such in certain nations having a great deal of domestic market, for instance Argentina, Brazil, Chile, India and Mexico. There was the stimulation of the procedure during the initial part of the 20th century and this was so at the time of both of the world wars. There were hindrances to international trade at the time of the World War I and II, and there was the decrease in imports of manufactures from the traditional supplies in developed nations because of the import-restrictive policies which had been placed due to the problems related to the balance of payments. Following the World War II there had been the implementation of policies by a huge number of newly independent developing nations and these policies were there for favouring domestic manufacturing of products over the imports. It was import-substitution industrialization policies which formed the basis for the common and a considerable modification in the historical division of labour between the advanced and the backward nations. Mexico Overview Mexico was one of the lesser developed nations that underwent industrialization and attempted at improving the living standards. The industrialization in this nation that took place following the Second World War had a great effect on the country and it “radically transformed” Mexico (Bustamante, Reynolds, & Ojeda, 1992: 228). Fifty years before the nation had been mainly rural and agricultural. The majority of the people habited in the countryside instead of the urban areas and the cities. The agricultural value-added was approximately the same as that obtained from the industrial sector. Today the scenario is different. Majority of the population lives in cities instead of the countryside like before. The country urbanized and become industrial. The industrial GDP has risen to a great extent while that from agriculture has gone down considerably. These kinds of changes have resulted due to post-war industrialization and have urbanized the nation. Through the industrialization procedure the workers were provided with skilled employment. Along with this there was also a generation of great opportunities of growth and profit for national and multinational enterprises. Post War Economic Growth After the end of the World War II the President of Mexico of that time, Miguel Alemán Valdés, started a program of full-scale import-substitution which had been provided stimulation through boosting the internal demand (Werner, 2001). There was a raise on the import controls on consumer items by the government. However, those on the capital goods had been lowered. The government bought these using the global reserves that had been collected during the time of the war. Also, there was a constant and progressive undervaluation done of the peso by the government for the reduction of expenses of imported capital products and also for the expansion of productive capacity. The government spend a lot on the infrastructure, such that by the year 1950 the road network of Mexico reached up to 21,000 kilometres and out of this 13,600 had been paved. Mexico continued to show strong economic performance even till the 1960s at which time the GDP growth was at an average of 7% overall and 3% per capita. Manufacturing continued to be the nation’s most dominant growth sector, with an expansion rate of 7% per year, and it also attracted a lot of foreign investment. The Process It was first in the 1930s, and later at a quicker pace following the World War II, that there was the creation of new industries in Mexico by the national as well as the foreign investors. These industries included those of pharmaceuticals, automobiles, tires, electrical appliances, and synthetic fibres. There were certain that manufactured consumer nondurables, while the others produced consumer durables which had never been produced in that country at the time of the Porfirian industrial boom. The majority of those novel industries had features such as: protection by means of tariffs and rules; they were selling to the domestic market; they were importing the majority of the capital goods and technological base. Even though several of the branches of manufacturing had been new for Mexico, and there had been considerably higher growth rates as compared to the nation’s previous and former industries, they had not been the newest, nor the most advanced or competitive industries when seen on an international scale. Following the World War II there was the development of nuclear and aerospace industries, computers and such advanced areas of manufacture by the advanced industrial nations. Mexico, however, was involved in the development of industries which were formed in the highly industrialized nations in the former times. There has been argument by several economists that the developing economies should be re-structuring their industry away from agricultural and extractive sectors for export to production for domestic as well as export markets. There was no exception with Mexico. In Mexico as well there were the instruments of ISI focusing on several important and major policies, that included the dependence upon the important public outlays for infrastructure, planning, tariffs, import licensing, quotas, exchange rate controls, wage controls, and direct government investment in the important areas (Cardoso & Helwege, 1993; Bruton, 1998). Since the start of the Second World War and until the beginning of the 1970s, such a strategy turned out to be performing quite well in Mexico. The conditions were so good that this era is called Mexico’s “Golden Age”. It was during this era that the growth of the economy was more than 6 per cent each year, and estimates to more than 3 per cent in per capita terms. A strong manufacturing sector could be developed majorly due to the growth in the nation. Production progress in the nation of Mexico was an operation of a developmental state. Mexico underwent industrialization by means of constructing public infrastructure, conditional government support and import substitution (Moreno & Ros, 1994). The Mexican industries were given government subsidies and import protect. They were also provided with loans from national development banks. This was exchanged with strong consequences, which include the regional content needs, controls on prices, technological innovation, capacity and exports (Anderson 1963; Blair 1964). Results Although the nation got such gains as have been mentioned above, Mexico was not able to attain two majorly significant aims. The nation did not achieve a competitive industrial framework neither was it able to resolve the issue of age-old employment. That means, due to post-war industrialization the nation did become modernized but it did not escape from under development. Mexico had frequently been behind the other countries in industrial expansion. For instance, railroads were there after 1880. Even till the Second World War Mexico was importing railroad equipment while Great Britain and the United States manufactured it. In Mexico’s industrialization there was the lack of backward linkages which featured industrialization in the highly developed nations (Haber, 1995). Conclusion Before 1940s the Mexican economy had been mainly agricultural. At the time of the Second World War there was the introduction of agendas by the government which led to successful development of the nation’s manufacturing and industrial sector, and it also diversified the economy. From the time of the 1980s – and particularly from the middle of the 1990s during which time there were special trading relations taking place among the NAFTA nations of Mexico, Canada, and the United States – there was a great rise in the productivity and employment of Mexico’s manufacturing sector (Stacy, 2002). It is such productivity gains because of which there are now rising incomes and increasing levels of living standards for a lot of the Mexicans. References Anderson, C. (1963). Bankers as Revolutionaries: Politics and Development Banking in Mexico. The Political Economy of Mexico. C. A. e. W. Glade. Madison, University of Wisconsin. Blair, C. (1964). Nacional Financiera: Entrepeneurship in a Mixed Economy. Public Policy and Private Enterprise in Mexico. R. Vernon. Cambridge, Harvard University Press. Bruton, H. J. (1998). A Reconsideration of Import Substitution. Journal of Economic Literature. 36(2): 903-936. Bustamante, J. A., Reynolds, C. W., & Ojeda, R. A. H. (1992). U.S.-Mexico relations: labor market interdependence. Palo Alto, CA: Stanford University Press. Cardoso, E. and A. Helwege (1993). Latin America's Economy: Diversity, Trends, and Conflicts. Cambridge, MA, The MIT Press. Moreno, J. C. and J. Ros (1994). Market Reform and the Changing Role of the State in Mexico: A Historical Perspective. Empirical Studies: The State, Markets and Development. Kwankin, MIT Press: 107-143. Rosenberg, N. (1982). Inside the black box: technology and economics. Cambridge: Cambridge University Press. Stacy, L (2002). Mexico and the United States. Singapore: Marshall Cavendish. Werner, M. S. (2001). Concise encyclopedia of Mexico. 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