What awaits Mexico if López Obrador wins?

The economic proposals of the presidential candidate create controversy for being radical and for some unviable

What awaits Mexico if López Obrador wins?

The opposition candidate Andres Manuel Lopez Obrador (AMLO), from the coalition Together we will make history, leads the presidential polls in Mexico to little more than 60 days for voting. If the trend continues and confirmed at the polls, he would become the next president of Mexico, ending with more than 80 years of PRI and PAN governments, but his role does not end there, since he has proposed to transform the Mexican economy radically, although for Many economic analysts' changes point in the wrong direction.

Leer en español: ¿Qué le espera a México si gana López Obrador?

What economic proposals does López Obrador have?

AMLO, 64, has lived the economic transformations of Mexico since the last century. Since the end of the 50s, the country experienced a stage of sustained economic growth that managed to maintain until the early 70's, stage called the Stabilizing Development. During the Second World War, Mexico benefited from the great demand for raw materials that the United States had, so it achieved stability and growth, but with the end of the war and the fall in demand, dynamism was lost and imports increased.

In general terms, the government oriented public spending to create facilities to produce in Mexico and reduce imports to the maximum to end the deficit, in a system called import substitution, which translated into sustained levels of growth with which important infrastructure was built as housing, hospitals, first-class urban developments and sporting events.

The decline of this model for Mexico came hand in hand with the recovery of Europe after the post-war reconstruction, the fall in oil prices, the low competitiveness of Mexican products that invested little in innovation and technological development, the development of several countries in Asia Pacific that corresponded to changes in a new global economic context to which Mexico did not respond favorably.

The proposal of López Obrador is to apply the economic policies of Stabilizing Development in a totally different global economic context, in an open Mexican economy, being one of the countries with more free trade agreements in the world. Food self-sufficiency and price control are other proposals that are integrated into its model, including the control of the price of gasoline, which has increased in the current government, despite having promised that the energy reform would reduce it, which is why Obrador proposes to build new refineries.

AMLO has in mind to reduce government spending through Republican austerity, reducing the salaries of officials, including the president, removing the pension to former presidents, selling the expensive presidential plane, canceling the New Airport in Mexico City and reducing the Expenses in areas that do not consider strategic. In spite of this, it is not clear the savings figures that these measures would represent and if it would be enough to finance their other proposals, such as doubling the minimum wage.

Faced with the Free Trade Agreement with the United States, the candidate has been open to negotiate and improve conditions for Mexicans, if an agreement is not reached before July 1 and to win the elections, it would be the AMLO government that negotiated the FTA Finally, it has announced the reduction of taxes, but without making clear its fiscal policy. With these proposals he intends to reorganize the country's economy, "without neoliberalism", in his own words, which has earned him the support of a large part of the population, but worrying entrepreneurs from all sectors, including the richest Mexico: Carlos Slim, with whom he has faced in recent days.

The main rating agencies have pronounced themselves in different ways, some more optimistic as BMI Research or pessimistic as Fitch Raitings, however they are not fatalistic. To be sure, no one knows the result they would have in practice, for some analysts AMLO would not have time to profoundly transform the Mexican economy, as it would require constitutional changes that took decades for other governments to achieve.

 

Latin American Post | Luis Liborio

Translated from "¿Qué le espera a México si gana López Obrador?" 

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