Editorial

Mexico now: the second land of the rising sun

Peter C. Newman June 2 1980
Editorial

Mexico now: the second land of the rising sun

Peter C. Newman June 2 1980

Mexico now: the second land of the rising sun

Editorial

Peter C. Newman

This issue’s cover story by Foreign Editor David North draws dramatic attention to the progress and aspirations of Mexico. It’s a vast and fascinating land whose population of 72 million (50 per cent under 20 years old) is due to reach 120 million by the end of the century. (By then, Mexico City, currently growing at a thousand countrysiders per day, will have become the world’s largest metropolitan area, with something like 40 million inhabitants.)

Mexican President José Lopez Portillo visits Ottawa this week and Prime Minister Pierre Trudeau should use the opportunity to absorb some useful lessons on how an economy can be run in the interests of its own citizens. The purpose of the visit is ostensibly to hammer down an agreement under which Mexico would provide our East Coast with up to 100,000 barrels of oil per day. Much more to the point is that even though the two countries are among the most significant oil producers outside OPEC, Mexico derives significantly more benefit from its petroleum industry than we do from ours. All its oil production is domestically owned by Petróleos Mexicanos, which has become Latin America’s largest industrial enterprise, employing 100,000 people. (Only about 26 per cent of our oil and gas assets and about 10 per cent of our refining capacity is Canadian-controlled.)

Unlike Canada, Mexico has implemented an imaginative industrial strategy which includes lower corporate tax rates for new ventures and an active import substitution program. Most important of all, Mexico is on the way to achieving something Canadians can only dream about: control over its economic destiny. This Mexicanization process forbids outsiders from acquiring more than 49 per cent of the assets of local companies, granting domestic entrepreneurs the chance to reap the benefits of their own efforts. The number of foreign executives and directors is not allowed to exceed the proportion of foreign ownership in any one company. Penalties for gringos who prefer to try doing things their own way are starkly simple: the fine for breaking any regulation amounts to the value of the transaction involved.

Despite these strict parameters, foreign ownership accounts for 40 per cent of all industrial production, and foreign investment funds continue pouring into Mexico, with 80 per cent of the flow coming from the United States.

This form of Mexicanization, tailored to Canadian circumstances, is precisely what we need if we are ever to regain control over our own economy. All we can do at the moment is echo the cry of President Porfirio Díaz, one of Portillo’s less imaginative predecessors, who lamented: “So far from God, so near the United States.”