Economic History of Mexico - Economic Woes and The Great Depression

Economic Woes and The Great Depression

During the ten-year Mexican Revolution, Mexico's social and economic problems erupted To help curb these problems, the Mexican Constitution of 1917 was drafted. The formation of the Institutional Revolutionary Party in 1929 officially ended Mexico's social struggles and Mexican politics was now conducted in peace. However, the economy would soon suffer as the Great Depression emerged.

Mexico's economic state The Great Depression brought Mexico a sharp drop in national income and internal demand after 1929, challenging the country's ability to fulfill its constitutional mandate to promote social equity. Still, Mexico did not feel the effects of the Great Depression as directly as some other countries did.http://www.photius.com/countries/mexico/economy/mexico_economy_the_great_depression.html%7Cdate=April 2010

The railroads were nationalized in 1929 and 1930, the nationalization of the petroleum industry in 1938, and the acceleration of land reform, first under President Emilio Portes Gil (1928–30) and then under President Lázaro Cárdenas (1934–40) in the late 1930s. To foster industrial expansion, the administration of Manuel Ávila Camacho (1940–46) in 1941 reorganized the National Finance Bank (Nacional Financiera--Nafinsa), which had originally been created in 1934 as an investment bank. During Camacho's term, Mexico's economy officially recovered from the depression and had become more properous than it had ever been. With the beginning of Camacho's term in 1940, a nearly 30-year period known as the Mexican miracle had officially begun.

During the 1930s, agricultural production also rose steadily, and urban employment expanded in response to rising domestic demand. The government offered tax incentives for production directed toward the home market. Import-substitution industrialization began to make a slow advance during the 1930s, although it was not yet official government policy.