Elections in Mexico -- No Matter Who Wins, There Are Positive Signs for Development

I'm heading down to Mexico on Monday and I'll be very interested to hear what people are saying about the results of the presidential elections being held tomorrow.   No matter which candidate wins, the election has the potential to continue the historic shift in Mexican politics that has taken place over the past 10 years along with the country's continued march to being a fully developed economy.

In my own experience traveling around the world, there is an inextricable link between a country's political climate and its place on the continuum of economic development.  Generally speaking, in developed economies, there is a vibrant middle class with a vested interest in political outcomes and that vested interest is reflected in the dynamism of the political process and debate.  Conversely, in countries with much less developed economies, wealth is so concentrated in the hands of the entitled class, that the economic and ruling elite are one and the same and there is very little real vibrancy infused in the political process.

When I first began doing business in Mexico, NAFTA was just coming into reality and the PRI was still entrenched in its 70 year reign of political dominance.  The country was working its way through the effects of "The Devaluation".   The tone of government seemed paternalistic and the average person, although clearly feeling the impact of government policy, seemed cynical about their ability affect that policy one way or the other. 

When the PRI was unseated from the presidency by Vicente Fox and PAN, I believe it was a symptom of the sea change in political empowerment that comes with economic development.  Whatever the outcome, the elections this year continues that trend.  The polls have been shifting continuously throughout the campaign, making this the first election when any one of the three major candidates -- Felipe Calderon of PAN, Andres Manual Lopez Obrador of PRD and Roberto Madrazo of PRI -- have a chance to win.

Perhaps the biggest story is the heated battle between the two front runners, Calderon of the incumbent Fox's PAN party and Lopez Obrador of the left wing PRD.  Lopez Obrador is running on the strength of the 30% of the population who have not yet been pulled along by the strides in economic development over the past 10 years and still constitute a sizable population of the disenfranchised and disadvantaged .  The PAN is painting Lopez Obrador as a Castro-esque leftist who would bring to Mexico an anti-American agenda similar to that of Hugo Chavez in Venezuela.  Acknowledging the impact of both the geographic proximity to the US and the importance of trade with the US on Mexico's economy, Lopez Obrador has denied that such an agenda is practical -- although the terms in which he has denied its feasibility makes one think that in the perfect world, that would be his leaning.  (Another interesting angle on the ties between Mexico and the US is the impact that the 10 million Mexican citizens living in the US may have on the election since they are entitled to vote).

It remains until tomorrow to be seen whether Lopez Obrador and PRD can unseat PAN, or whether PRI can regain power in an improbable come from behind victory.  I tend to think that Lopez Obrador's recognition of the practical constraints of being so closely tied economically with the US will moderate his agenda regarding business relations between the countries if he prevails, although he would certainly pursue a much more restrictive policy concerning foreign investment in certain industrial sectors such as banking that have been opening up over the past 6 years.   Of course if Calderon prevails, then I think Mexico's stance toward free trade will continue to be very bullish.

But i do think that perhaps the most important aspect of this election is the clear investment that the people seem to have in the outcome.  One gets a sense that the average Mexican firmly believes that they can impact government policy -- a sure sign that a majority feel that they own a personal economic stake in the country's future.