The Enclave Economy

Abstract

This book went to press on the eve of the tumultuous presidential election in Mexico in July 2006. A pro-globalization champion of a newly emergent middle class squared off against a populist defender of the “losers” of globalization—farmers, workers, the urban poor. For weeks after the razor-thin election, millions of people marched and camped in Mexico City’s zocalo, convinced that the election had been stolen. The fundamental axis of political confl ict in Mexico—and indeed in much of Latin America—involves the issues that we explore in this book: the social, environmental, and economic impacts of “Washington Consensus” policies based on global market-led growth, the role of foreign direct investment in promoting economic development and industrial transformation, and the economic and environmental sustainability of marketdriven globalization as a development path. In the 1990s, Mexico was a “poster child” for globalization. In an abrupt about-face, Mexico threw open its borders to trade and foreign investment, embraced the North American Free Trade Agreement (NAFTA), and ejected government from its role in building up domestic industry. Multinational corporations swarmed into Mexico, creating low-wage jobs in enclaves. Domestic fi rms, including some in the hightechnology sector, went bust at a rapid clip. Along with large numbers of farmers displaced by agricultural imports from the United States, the result was ever-increasing unemployment and migration, a deeper and more apparent gap between globalization losers and winners, and the political mobilization of the “losers” and their allies. The story was repeated throughout Latin America. The election cycle of 2005–2006 was widely seen as a referendum on “free-market” policies