Mexico and The World Bank: Rebuilding a Country

Mexico and The World Bank: Rebuilding a Country

Length: 1778 words (5.1 double-spaced pages)

Rating: Excellent

Open Document

Essay Preview

More ↓
Mexico and The World Bank: Rebuilding a Country

The 1994/1995 financial crisis in Mexico affected me in a very personal way. My family is from Mexico City, and my dad owns a small private firm that specializes in manufacturing tools. After the devaluation, I not only watched my father struggle with the failing economy and lack of business growth opportunities, I also witnessed a country begin to sink deeper into poverty and despair. There are many reasons for the devaluation, but one of the main ones is probably the “poor savings rates and the low rate of investment (only saved 19 percent of GDP from 1980-1994)” (Bloomburg). Low levels of social development and high levels of poverty consistently served as a drag to economic growth and reform measures.

Next fall I am going to spend a quarter in Washington D.C. completing an internship at the World Bank. I am going to work in the Latin American department, so I will have the opportunity to deal very closely with the Bank’s strategies and projects in Mexico. Therefore I have decided to research the relationship between the World Bank and Mexico.

The World Bank is one of the world’s largest sources of development assistance. It is not really a bank, but rather a specialized agency comprised of 184 member countries. Along with several other institutions, the Bank provides low-interest loans, interest-free credit and grants to developing countries. The Bank has provided assistance to Mexico for over 5 decades, and projects loans totaling $5 billion to Mexico up to the year 2005. Mexico holds the second largest share of the Bank’s portfolio, which totals to a whopping 11.1 billion dollars (9.4 % of total portfolio). The Bank works alongside Mexican authorities and officials and both regional and municipal levels to lay out plans and devise strategies that will hopefully help to build up the Mexican economy and social welfare. The Bank currently runs 31 active projects with a net commitment of $5.4 billion.

Today Mexico is defined as a middle-income country, although many of its residents continue to survive off less than 1 or 2 dollars per day. Those who live on less than $1 per day do not have access to sufficient food or clean water. Income per capita is $5070 (the highest in Latin America).

How to Cite this Page

MLA Citation:
"Mexico and The World Bank: Rebuilding a Country." 17 Jul 2018

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Issues in Mexico Essays

- When we hear discussions or read articles about drug wars, killings, and illegal immigration into the United States, many of us immediately think of Mexico. As a nation, Mexico is a much greater country than these commonly referred to issues. Mexico is a country with a broad history, deep family culture, and an economy fueled by oil and tourism. The United States Department of State (USDS) offers a broad range of information on countries outside the US, including Mexico. I found a wealth of information about Mexico through the USDS Background Note provided on their website located at   [tags: Mexico]

Research Papers
1097 words (3.1 pages)

Essay on What is the World Bank?

- During, and in the years after the World War 2, there was a significant need of financial aid, especially in Europe. The structural US were almost untouched, and their economy was rising. Soon they became the new superpower. At a conference held in Bretton Woods, New Hampshire, in 1944, the World Bank (WB) was founded for purposes of reconstruction in Europe. The head office was placed in Washington, and the bank president was American. When the economic situation in Europe stabilized, the WB shifted its focus....   [tags: Economics ]

Research Papers
977 words (2.8 pages)

Democracy and Economic Development in Mexico and Russia Essay example

- ... On the contrary, Russia received a score of 5.5. Based on this score, it is considered a not-free country, meaning that basic political rights are absent, and basic civil liberties are widely and systematically denied, it is a non-democratic country. (Freedom House n.d.) The gross domestic product of a country is one of the primary indicators of its economic performance. It can be defined as the total value of goods produced and services provided in a country during one year. Per capita GDP is sometimes used as an indicator of standard living, with higher per capita GDP interpreted as having a higher standard of living....   [tags: civil war, technology, income]

Research Papers
543 words (1.6 pages)

The Impacts of the IMF and the World Bank Essays

- The Impacts of the IMF and the World Bank The World Bank and the International Monetary fund make up major parts of the UN's Economic sector. For both institutions the groundwork was laid in the Bretton Woods conference. The World Bank's initial task was to facilitate reconstruction in the post- World War II Europe. It generates capital fund from member state contributions and from international financial markers. Its loans are not designed to replace private capital but to facilitate its operation by funding projects that private banks would not support, e.g....   [tags: Papers]

Research Papers
933 words (2.7 pages)

The Relationship Between the IMF and World Bank, Questions and Answers Essay

- 1. Where does the IMF get its money from. The IMF gets its money from the member of countries and by their payment of quotas. 2. Does the IMF help the poor countries. If so, how. The IMF helps and supports the poor countries by changing nature of economic circumstances and prevents the major economic disasters in poor countries. It also helps to eliminate the weakness of a country due to global economic crisis. 3. Why was the IMF formed in the first place. The IMF promotes worldwide economic stability and monetary association....   [tags: economic crisis, WTO]

Research Papers
639 words (1.8 pages)

The Impact of Multinational Corporations on Mexico Essay

- Latin America has seven big economies Brazil, Mexico, Argentina, Venezuela, Colombia, Chile and Peru. The largest economy can be shown as Brazil. Mexico is the second largest economy in Latin America and expanded at a strong pace for most of 2011 but started to show signs of slowly decelerating. Result to that seems to be multinational firms. The multinational firms set up their factories to Mexico to reduce the cost of production. Although the multinational firms seem to be helping the Mexico economy, they also harm the domestic firms....   [tags: Multinational Corporations (MNCs)]

Research Papers
1099 words (3.1 pages)

The Emergence of the Zapatistas, in a Neoliberal Capitalist World Essay

- US immigration is a historical reoccurring phenomenon that is situated upon the exploitation of workers to bring economic prosperity to the country. Immigration is the backbone aspect to the success of the US as large influxes of immigrants are imported to work in physical demanding job sectors. There are comparable feelings of alienation of Mexicans and many views that express the feelings that illegal immigrants should return to their homelands. By examining the laws, policies, and structural forces that bring migrants to the United States, we can see the extent to which immigration is closely related to our position in the global economy and how a group of leftist armed activists dare to...   [tags: us immigration, mexico, nafta]

Research Papers
1394 words (4 pages)

Essay on Mexico

- Mexico remains far behind it's North American neighbours, economically it has become stagnant and sluggish, and as a result the nation has been riddled with social inequality. But some might argue that unlike other nations, Mexico has been pampered and is left without excuse for remaining in such a state of underdevelopment, so far behind the West. But to the contrary I believe that it is that very “pampering” and extra attention from Washington that has led to Mexico's current state, its location and close relationship with the US have, in my opinion, become the downfall of the Mexican economy....   [tags: Mexican Economy, Underdevelopment]

Research Papers
2507 words (7.2 pages)

Essay on Third World Country

- A Third World Country is a term used for developing countries, and least developed countries. These countries are economically underdeveloped. Characteristics of a third world country are poverty, agriculture economy, disease, high birth and infant mortality rates, over-population, poor infrastructure, unstable governments, poor health care, environmental problems, non educated people, starvation, and death. Those characteristics are the first thing that comes to someone’s mind about a third world country....   [tags: Africa Latin America Asia]

Research Papers
880 words (2.5 pages)

Mexico Essays

- Why should I invest in Mexico. Mexico has established itself as one of the biggest emerging markets in the world today. It has exhibited many of the signs of a high growth economy, offering several advantages to prospective investors. Some highlights of the Mexican economy include single-digit inflation, a balanced public budget, real economic growth (presently at a rate of 12 percent), a deregulated economy and a favorable investment climate etc. Mexico also possesses a strategic geographic location as a gateway to Latin American markets....   [tags: essays research papers]

Free Essays
1449 words (4.1 pages)

Related Searches

Life expectancy at birth is now calculated to be 72. The under-five mortality rate dropped from 46 to 29 per 1000 births between 1990 and 2000. Almost three quarters of the population lives in rural areas, and 86 percent have access to clean water. Yet there is also a huge gap between the northern and southern regions of Mexico (with the Northern being more industrialized) and a huge gulf between the rich and the poor. There is room for much improvement, and Mexico must work hard at establishing an efficient government that will allow for economic growth and a rise in the standard of living.

Reducing poverty is generally accepted as Mexico’s main goal over the next few decades. But there are many underlying obstacles that must be addressed before poverty levels can begin to be quantifiably reduced. Development policies designed by the Bank attempt to focus equally on administration, infrastructure and the environment. These are the sectors that rely on the World Bank to provide investment and strategic management, but Mexico must also increase its competitiveness in the world market, boost its agricultural productivity and maintain economic stability. Only then will Mexico be able to directly address the poverty issue.

The acronym CAS stands for the Country Assistance Strategy. The CAS outlines a development agenda that is consistent with the Mexican National Agenda for the years 2001-2006. There are five main points to this agenda:

1-Consolidate macroeconomic gains
2-Accelerate growth through enhanced competitiveness
3-Reduce poverty by investing in human capital
4-Create environmental sustainability
5-Create a more efficient, accountable and transparent government

The first goal basically means that Mexico needs to establish economic stability, primarily by creating stricter budgetary rules, extensively reform taxes, and improve the tax administration. Once these goals are completed, the groundwork will be laid for Mexico to grow and compete more successfully in world markets. One example of a project designed by the World Bank to aid the financial sector is the Financial Sector Project (1995-2000). Under this project, banks in trouble were analyzed and restructured, and all major banks were audited. The World Bank also established a new regulatory framework for private debt and attempted to secure capital-market transactions. The main goal was to extend regulation and supervision of all banks so that they would be forced to act fairly.

The second goal basically states that Mexico needs to improve its infrastructure so that it can subsequently increase agricultural productivity and become more competitive. I think one of the greatest problems in Mexico is the lack of a legal and institutional infrastructure that would allow fair capital market transactions to take place. The central banking system is also in need of great reform. The World Bank is attempting to encourage the Mexican economy to integrate more small and medium-sized firms. This would mean increased investments in business like my father’s tool business, one that ultimately suffered from a complete lack of local investment. Just as importantly for business growth, the Bank proposes to remove barriers against private cash flows by liberalizing sectors that are dominated by public monopolies (for example energy and housing).

But increased investment is not only needed for businesses, but also for improving physical infrastructure. The road system in Mexico has greatly deteriorated, and efficient transport is a major problem. One project that was aimed at combating this issue is the Highway Rehabilitation and Safety Project. This project resurfaced around 51,000 kilometers of federal roads, and by the year 2000 around 61 percent of federal highways were proclaimed in good or fair condition, compared with only 43 percent before the project was enacted.

The third goal is mainly a focus on education and health issues in Mexico. One of the Bank’s goals is to ensure that all Mexicans have access to basic health care and educational services. It is also important to protect groups that were left behind in poverty during times of decent growth. The Bank attempts to fund projects that will remove labor distortions and move workers to more formal sectors of the economy.

The Basic Education Project of 1999-2001 improved the quality of education in rural, poor and indigenous areas. The project increased the number of secondary schools and attempted to improve the quality of teaching. The Primary Education II Project raised the standards of elementary education in some of the most backward and poorest states of Mexico. The main aim of this project was to bring the educational standards in these areas up to at least a national level. To reach this goal, management of schools was improved, new books and learning materials were provided, and teachers were given further training. Graduation rates rose from 66 percent in 1994 to 80 percent in 2000-2001.

A general program with the goal of reducing extreme poverty in Mexico was the Second Decentralization Project of 1996-2000. It focused on providing basic infrastructure to eight of Mexico’s poorest states by installing clean water, building decent roads, fixing schools and providing technical assistance to locals who were attempting to build up trades and businesses.

The fourth goal concentrates on sustaining the environment, which is consequently a means of also increasing agricultural productivity. In order to sustain future development, Mexico needs to protect its natural resources such as water supplies, and to manage waste, energy, air quality and forestry efficiently. If natural resources are not depleted, agriculture and industry can increase, and therefore poverty will no longer be generated or sustained by declining natural resources.

Air pollution in Mexico City is a huge issue that I am very familiar with. It was reduced substantially by enforcing standards for vehicle emissions and by developing guidelines for improving the standard of air quality. The Transportation Air Pollution Project of 1999, reduced the concentration of ambient lead by 98 percent, and reduced the level of sulfur and ozone in the air.

In the agricultural sector, the Bank developed a project called the Rainfed Areas Development Project that enabled farmers to invest in small-scale irrigation and drainage, and also soil conservation and livestock production. Previously these farmers had not had access to private-sector capital, and this project enabled them to change from corn production into crop production that would receive higher profits on the international market.

The last goal, and in my opinion the most important goal, is to create a more efficient and transparent government. During my experience in Mexico, I witnessed so much corruption and deceit, from officials and leaders essentially stealing money from the government, to poor people being robbed of even the most basic opportunity to create a business. Mexico needs to strengthen and improve its government on all levels. This includes anti-corruption procedures and reforming the legal system. The Mexico Decentralization Project of 2001 increased the transparency and public accountability of the tax system. It also imposed strict budget constraints on the federal funds provided to the lower levels of the government. Projects such as these strive to increase the efficient action between authorities at the federal, state and municipal levels. This will greatly aid in the much needed process of decentralization.

The Bank has designed projects to complement these basic goals such as modernizing crops, strengthening the land title system and expanding rural finance. The Bank has also created a program that will take the savings of Mexican migrants living abroad, and invest these savings into small business in their home towns (World Bank Website).

One of the most important improvements in Mexico’s agenda is the process of decentralization. Policy decisions in all the key development areas mentioned above, such as education, health, environment, business investment, and infrastructure, are now made at the regional level by the states and cities, in conjunction with the federal government. The World Bank is acting with this concept of decentralization in mind, by placing greater weight of state-level policies and programs. The Bank is currently investing in several programs that combat many of the goals listed on the CAS agenda. The Bank just approved a $202 million project to protect the environment, a $400 million loan for rural investment, and a $64.6 million project to improve financial services to the poor.

Mexico has a long way to go, but with the help and financial support of institutions such as the World Bank, it can hopefully develop into a strong and independent nation that is able to avidly compete in world markets.
Return to