Mexico: the road to poverty is paved with expropriations

Beatrice E. Rangel

By: Beatrice E. Rangel - 30/05/2023


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For Andres Manuel Lopez Obrador, president of Mexico, the government's capture operation of one of the most commercially significant railways in the country belonging to Grupo México meant the repossession of something that belonged to the state. According to this criterion, the 1995 constitutional amendment that gave rise to framework laws to govern the privatizing state railway services do not exist and therefore the government can make use of assets that are its property. When the Supreme Court of Justice of Mexico intervened in the sense of declaring the nullity of the measure, the president of Mexico limited himself to saying that he would recognize compensation but that this would in no way involve a cash payment.

This decision will be remembered as the watershed that defines the border between the maintenance and the dissolution of the rule of law in Mexico. For this reason, it raises interesting questions about the immediate future of Mexico and Latin America.

Given the decision from the interest of Mexico, it freezes the industrial relaunch process of the country developing links in the value chain of the North American economy that are relocating from COVID 91. Experts estimate that this process would have allowed Mexico to increase the proportion of Mexicans who enter the ranks of the middle class and come out of poverty by 5% in a decade. Therefore, Mexico is not only destroying a locomotive of progress but condemning millions of families to poverty.

From the point of view of the interest of the United States, the development of manufacturing activities integrated into its value chain in Mexico allows it to maintain price stability, thereby protecting its middle classes. And as the middle classes grow on both sides of the Rio Grande border, the locomotive of development can take off once more to pull the world into a new era of economic stability.

For the rest of the region, the decision deepens the negative sentiment of investors who do not see it as a safe destination to develop projects other than commercial ones. In fact, in Mexico the measure has frozen investment plans in various sectors including finance, energy and transportation for the significant sum of $15,000 million. A sad future for the country that has formed the largest middle class in Latin America in the last 25 years thanks to the foreign investment that flowed under the channels of the free trade agreement with the United States and Canada.


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