Global Managerial Economics: Mexican Experience with Globalization - Research Paper Example

GLOBALIZATION AND THE MEXICAN EXPERIENCE Confronted by the torrents of sweeping globalization, numerous emergent economies wrangle with questions oncultural identity and national sovereignty. Movements related to this phenomenon such as the upsurge of multinational corporations (MNCs), the shifting character and prominence of the nation state, escalating number of cross national agreements and partnerships, privatization and liberalization, technological convergence on the rise and obscure national boundaries all have generated intricacies, ambiguities and insecurities in a country's cultural identity. Specific questions like, how does Mexico define itself and its culture in the age of globalization Does the country's growth of free market principles also mean the loss of traditional ways and culture What about the government What role does it play to preserve and nurture cultural identity or to promote the growth of a global culture and economy What about workers' rights Will they be greatly affected now that the country has opened its doors to global economy These ambiguities have become even more well-defined in a country like Mexico who has to face both the challenges of considerable local populations and a remarkably dominant and powerful neighbor from the North. This nation must not only deal with protecting, maintaining and upholding a clear-cut Mexican identity in the midst of foreign cultural material but must likewise exert great effort in integrating indigenous clusters with languages and cultures that are in and of themselves distinct and irreplaceable. NAFTA, Trade Liberalization and the Mexican Economy The move to a free market economy from a protectionist system commenced in the 1980s. Previous heads of state, de la Madrid and Salinas, worked to support and cultivate economic liberalism and paved the way for the signing of the 1994 North American Free Trade Agreement (NAFTA) by Salinas which unlocked the doors of a previously "secluded" country to the international economic community. The agreement aimed to gradually abolish tariff and non-tariff barriers to trade in goods, upgrade access for trade in services, institute rules for investment, fortify protection of intellectual property rights and make way for dispute settlement procedures for the US, Mexico and Canada (NAFTA & Cultural Policy, 2000). Trade liberalization has had great influence on Mexican agriculture, corn farming specifically. A lot of poor people in Mexico engage in corn production, that it served as a gauge for the situation of the most marginalized groups in Mexican society. But after 10 years of NAFTA, results showed that the poor managed very badly. While academic professionals disagree on the intrinsic value and qualities of trade liberalization, the Mexican state persists to consider it as a universal remedy for poverty and underdevelopment. However, evidence implies that free trade agreements in general and NAFTA in particular, have aggravated the problems confronting the rural poor in Mexico. Workers' Rights A vital problem in Mexico is the dearth of self-governing unions that can thrash out on issues with conviction in collective bargaining agreements. Approximately 90% of all Mexico's collective bargaining arrangements are settled by non-independent, pro-government, pro-company unions. These "protection contracts" are basically settled without the consent, or even the knowledge, of the majority of workers. As it is, the law only requires that twenty workers belong to the negotiating union. The agreements impede the establishment of real independent unions, since new unions must later win an election in which at least half the workforce participates in order to take control of the collective agreements away from the non-independent union. Mexico's "Affair" with the World Bank and the IMF For almost 20 years, Mexico has adhered to almost every economic policy that the International Monetary Fund and the World Bank have mandated. Mexico's submission to IMF dictates has been so consistent, that in 1994 the IMF and the World Bank extolled the country as a "model student" that other Latin American countries should copy. Some model, from the time when Mexico first implemented IMF's recommendations of trade liberalization, privatization and deregulation, real wages have collapsed, poverty and inequality escalated, and the country's colossal debt burden grew by leaps and bounds. Mexico's experience with IMF policies provides a clear case of how the Fund favors the interests of international investors over the well being of ordinary people. In an attempt to divert short- term financial disaster and assuage investors, the IMF has destabilized Mexico's prospects of creating a secure and balanced economy. At present, after two decades of being subservient to the IMF and after seven years of the NAFTA experiment, Mexico remains a picture of poverty and inequality. Thousands of Mexicans live below the poverty line that even the World Bank confirms that 15 years of trade liberalization in Mexico have not succeeded in closing the gap between rich and poor. Key indicators in almost every social sector point to show serious decline and weakening over the last 15 years. It speaks of a lost decade and a lost generation. Conclusion Surprisingly, the gloomy scenario has not thwarted free market ideology from taking over public cultural space. Economic liberalism, principally and aggressively pushed by the elite, many of whom were educated in US business schools and the onslaught of global/US cultural products has altered the public cultural space away from conventional concepts of Mexican identity leaning towards a more westernized, or Americanized, cultural space, starving for profit and consumption. While a lot still work to shield and protect the nation's identity and culture, more influential and dominant forces have affirmed that a free market identity is what will propel Mexico into the global twenty first century. As Samuel Araiza, Mexico's Hewlett Packard corporate communications director, explicitly intimated, "In many senses, Mexico has probably advanced more towards globalization than the United StatesMexico has clearly come to understand that going global is the best way" (Castellanos, 1999, p. 2). REFERENCES Durand, J., Douglas, M., and Zenteno, R. (2001). "Mexican immigration in the United States." Latin American Research Review, 36, 1, pp. 107-127. NAFTA & Cultural Policy. (2000). "Foreign Investment in Mexico." Available online at http://www.flash.net/mexis/experts/legal_zobrist Ruiz, G. (1999). "Mexico: The 90's and Beyond." Business Mexico, pp. 1-5. Case, B. (1999). "NAFTA: Expanding Horizons." Latin Trade, p. 1 Castellanos, C. (1999). "Foreign interest: Mexico has become a major player in the international community." Business Mexico, p.2 Hanson, G.H. (2004). Globalization, Labor Income, and Poverty in Mexico. Paper presented to the University of California, San Diego and National Bureau of Economic Researc Read More