DID PRESIDENT Vicente Fox, who ended a 71-year one-party regime with his victory in July 2000, waste his chance to reform Mexico? If so, what are the consequences--both for Mexico and the United States?
Mexico is certainly a bit freer today than before 2000. But Fox is already considered a dead force in politics. The old regime's party (the Institutional Revolutionary Party, or PRI) is regrouping and aiming for a return in 2006, corruption has actually increased, and the quality of government has deteriorated. Few significant reforms have been implemented. Some have attributed this to Mexico's presidential system, which pitted a hostile Congress against a weak president. But the reality may be less complex.
In 2000 Mexico was ready for change. Despite their much-hyped macroeconomic reforms (as well as the passing of NAFTA), the last two PRI presidents, Carlos Salinas (1988-94) and Ernesto Zedillo (1994-2000), essentially only replaced the existing crony socialism with crony capitalism. The daily life of the average Mexican had not improved since the 1960s.
Fox was well positioned to introduce "second-generation" reforms, since his predecessors had implemented economic stabilization, foreign-trade liberalization and (albeit imperfect) privatization. Indeed, transitions of this sort provide what Leszek Balcerowicz calls the "window of opportunity", which can reinvent a country dramatically. The PRI system existed essentially to make a few people fantastically wealthy at the expense of the rest through elaborate restrictions. Second-generation reforms would have cut this Gordian knot: bureaucratic red tape, monopolies, obstacles to foreign investment (which is low per capita relative to similar countries), the byzantine tax code, criminal networks in government, a bloated public sector, the lack of property rights (which hampers credit) and so on.
