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Speaking of Mexico. Radio television the University of Texas in cooperation with the National Association of educational broadcasters presents speaking of Mexico. Dr. Raymond but one of Mexico's leading economists and past minister of finance of Mexico discusses Mexico in a economy past present and future with Dr Easton Nelson professor of economics at the University of Texas and director of the University's Institute of Latin American studies. Dr. Batiste most Mexican economists are accustomed to point with pride to the rate of economic growth maintained in your country during the last 20 years. Could you make a statement with respect to the rate of growth in Mexico. It was a pleasure and of the Newsome I mean I think that we are quite justifying the and I am proud that Mexico has had one of the most spectacular drills in the last 25 years and you're an NDP that from 40 to 46 broadly viewed to the war.
The rate of growth was about 7 and then during the period of months of ministration there we were able to hold it at seven during a six years which is a very very important rate. Then it went down. The policies change a little bit and lady of frugality came into the country and he came down a little bit. Now we are going up again. It's about 6:00 a.m. Stan. So you see it's one of the the highest in the world. Doctor but that you've managed. What do you mean by a shove and as those figure applied world wide or only to the rate of growth of Latin America or the American continent. Well I meant by 7. Percent per year. The aid supplied to Mexico exclusively so far as I know. I don't really know what the rate of the rate
of growth in debt like in America already in the United States. I would like as a matter of fact and now to tell us what the United States will as a matter of fact. Although we're enjoying our highest rate of growth since the 80s in the United States it is not so high. It is about 4 percent and that is a very respectable rate of growth in a highly industrialized country. And as for the rest of Latin America a few of the Latin Americas are up to Mexico. It's 7 percent rate of growth. There you see we are right to be proud. DR But what can you see of the rate of population growth and its significance for prospects for improving levels of living and consumption of the masses of Mexicans during the next 15 years. Well again here we have one of the highest rates of growth. I understand about 3 percent per year which will give Mexico about the a million new people every year. It's a tremendous growth of course. Now it would be a worse
or better. I don't know what you think. And if you just. It is a good symptom in itself a good sign because it doesn't that we reproduce more. It is that we don't die as much the rate of infant mortality has decreased and that shows of course an improvement in the country in the conditions of health and hygiene. But it is a danger. I mean after all mussels was right the airth is limited than the multiplication of the human races are limited and in the case of Mexico he very clearly pointed out towards the doors of danger and in some regions like Yucatan we are already suffering from overpopulation. Meaning by our population that there is not enough land to distribute them on the people because they were given land already but they have had to fill in the meal. So I think there's both a good sign on the sign of danger with
respect to this rate of population growth and possibilities for economic solution in Mexico. Could you say something about whether the most dramatic growth as it occurred in agriculture or in industry and what that indicates for urbanization in Mexico. Well he has been both in agriculture and in industry. You know to quote Europe in some particular products like sugar which we just import and now we support in wheat. Now we are self-sufficient we used to import also in cotton and coffee which at the present time I worked out to stand in products for exportation. The most important ones as a matter of fact they have been and they have taken the place of our metals which used to be the most important item of our exportation. But the REAL a spectacular growth in Mexico in my mine has taken place in industry and in connection with urbanism as you call it with the growth of the cities. It's very clear that the growth of the state of Mexico has been monstrous.
And I think that not very healthy. And you have mainly to the fact that industries concentrate in that region. No doctor but that I would like to ask you a question about maybe this is the $64 question. Has this hard and sustained economic growth been due to luck or the proximity to the United States already economic policy or to what do you attribute it. Well profit do everything a little bit. I am not degree believe in luck but I think that we have been lucky in some respects its not very nice to say what I am going to say but the war does help sometimes. And the indicator of Mexico in the last war did help industrialization because it demanded that Mexico would supply certain products which otherwise would not have produced I think the growth during the period of breath and they were like oh my chill was mainly due to the war. I mean that is big
you could call it luck. I hate to use the word dug in connection with war but in that sense on now it is not easy to talk about the things in which you have had a certain participation but I I believe that the growth of the country in the year in the allemande PDM forty six fifty two was due to him with a sound policy more than two about. Now as to the near miss of the United States. I don't know what extent that helps and what hinders broadening some perspective does both ways. So I would say that due to three factors you mention the doctor but there's been many times said that you have been one of the principal architects of Mexican economic policy during the last 25 years. I would ask you to comment on that observation but can you describe the Mexican economic policy of the bit that the period for us in a few simple strokes.
Well let's remember what the situation was when I was appointed minister of finance in Mexico who had just come out of the war. The factories of Mexico had used their machinery and equipment they practically took Sawston and the people were very anxious to buy do things they hadn't been able to buy them in the time of the war because they had them. We had had that system of priorities as you remember. And there were many things that could not be imported. So what we tried to do was number one to make an iced and improve the equipment of agriculture for the purpose of increasing our record your production which is basic in Mexico and everywhere else but Mexico is still to great extent. I recalled your country then. We tried to give it a chance to own the industry of Mexico to be re-equipped
and to buy whatever new machinery they could. Knowing all the time that that meant danger for our money for a world currency because it used up the reserves of the Bank of Mexico the central bank. But we felt that the important thing was first to create as much wealth and much production as we could. And without forgetting of course that production is not an end in itself. That we produce for the human beings and that the human beings are not the tool of production but at the same time we felt that. Social justice and a good distribution of wealth come when there is some wealth to distribute. If you don't have anything to distribute the justice in the distribution becomes meaningless. So that was the main guiding lights we had and of course we in there were in a very large program of public works trying to make them
as productive as possible. We emphasized Well credit for a record year and credit for for industry but as to works itself railroads highways electrification and particularly and most important perhaps of all the irrigation projects. Mexico you know is a country without water so all what little what do we do have has to be used to the nth degree and I think that the results are not very modest for me to say but I think that the results could be proven as been a means that's factoring. Doctor but that the world distributed as an industry grows throughout Mexico. And would you care to comment also on the present policy of the government of further industrial growth will help. We're not in our farmlands are available.
Well as to the first point the distribution is as you know not very even most of the industries concentrated in three parts around Mexico City in the felde district and state of Mexico which is the central plateau as you know. Then in the north around Monterey and Loba geom which is the second most important and then in the capital of the state of Jalisco Well Hala there are certain regions where industry still practically nonexistent. I was talking about Yucatan while all I wish that there were a way to absorb the excess of population of Yucatan. Through industry in that region. Now what was the second point you know that the U.S. policy of the government in providing industrial development in areas where there isn't enough land. Well the most important one has been of course seeing this
project on the on the isthmus of Mexico and that was something that we I think we at the time of the administration a big element decided to do after a very careful investigation of the situation of that region which has been traditionally very backward. The idea was to create something similar to the Tennessee Valley Project. It was a popular open river which was dammed then and a complete program was made not only to use the water and to develop their records here but to establish some factories afterwards. One has been done as a result of the electrification of the region which is a paper factory. And that's one example of what we're trying to do. It's obvious that public investment has had a very important role in Mexican economic policy.
You have given us some of the main outlines of public investment during the fall of man but that period. I should like for you to elaborate a little further if you will particularly only probable future role of the Mexican government in the ownership and operation of basic industries such as oil steel and electricity and the role of the nets you nothing and see it up in in this program of development. Well. I think that while private enterprise is still the most important and I would see the center of production in Mexico. There are fields which the government is reserving for itself. You have mentioned three of them oil.
Which in Mexico is exploited exclusively by the government in all its aspects in exploration in production of the crude oil in refining and in distribution. The whole thing also exportation is in the hands of the government. Then you mention also electricity. As you know the government has just bought some of the companies and some others have already bought it had developed through the Commission for that as they look to see that also re radial electrification of Mexico. So now Electricity is also in the hands of the government. The steel industry is partially in the hands of the government and I feel there is a tendency to doors Quine or a control in the mining industry. So I would think that the tendency is to limit to certain fields very specific Ali
and then feel see which private enterprise either doesn't have an interest or you know which if it's for the interest of the nation to have it in the hands of the government. You know as to the wrist I think that businessmen are quite satisfied that Mexican government does not plan not visualize the idea of steppin into the field of business and they can push out private enterprise. But you mentioned something else something else. Now you mention the nationality once you know the rule than assume the role and I doubt you know the nice enough and see it as has been the tool used by the Mexican government to promote industrialisation. I remember that even at the time when I was secretary of the Treasury the idea was that Mexico's savings while I were in significant and that the Mexican people could not save. Yet we were able to
begin selling the bonds are not enough you know Sierra and at the present time if I them my figures are not wrong. Now over a billion business which show that the Mexican people do buy into the bonds and there is a certain amount of of savings. Now the those savings are used for giving credit and promoting industries. The original idea has been that it was nice enough in ACA creates a new factory or a new source of production. If successful it passes through to lean to the private enterprise. Sometimes happens exactly the opposite in the case of other sordidness being started as a private enterprise with the help of the government and finally went entirely into the hands of the government and not because he had a figure but on the contrary has been a very outstanding very
spectacular success. But in general as you know if you don't see it or has been a very important factor in the industrialization of the country. Maybe to some degree you have already answered anticipated my next question which is that since two conflicting impressions with respect to business opportunity and freedom exist among American observers one of which is that business is severely limited if not an ultimate danger of expropriation while the other is that business enjoys more freedom and higher profits. In Mexico than in almost any other part of the Western Hemisphere. Would you care to comment on these two contrasting propositions. Probably in that one of the DO is completely correct. As you see that is not the complete freedom in Mexico for business. I have mentioned already a limitation of certain fields of investment. Also there are certain limitations for foreign investment. There is a tendency
to accept or to invite capital or NASA named partnership with the Mexicans. The idea being that the new enterprises would be and the hands of both the foreigners and the Mexicans but with a majority 51 percent of the shares about the fact in the hands of the Mexicans. We have been doing that this particularly with European firms. Well I was in a bus or train in Italy for instance we were able to create two or three of this type of enterprises which had been very successful. At the same time this idea of a foreign capital in general is one of the most difficult questions in Mexico I think that not to Mexicans Every as to what is the best policy. There are people who would like to go back to the liberal idea of Happy Valley is always a fertilizer comes and
like fertilizer on the earth produces flowers and fruits so that's capital like in America and makes us all very happy and very rich. Well that's unfortunately not correct and no one really believes that. On the other hand we have people on the very extreme left in Mexico who would not like to have any foreign capital at all. They claim that behind the dollar a franc or pound of whatever maybe there is always a political motive or there is always there. What is worse a flag an army or a navy. Well that I think is also completely mistaken. I personally feel that the best type of foreign capital for Mexico is the one that comes to Mexico through international banks or the World Bank or the import and export bank because in those cases the Mexican government through the National is really nice enough you know here as a matter of fact this side is in quite particular
enterprise the money should be used instead is the possibilities its convenience or its advantages for the country its possibilities of being self liquidating and therefore it helps to develop the contra following a certain plan doesn't have to be the communistic idea of an all comprising plan but at least some direction so that the and this money will be applied there which is most needed without any danger of. Your part I think the future of the country or having any political pressures on account of those investments I did same time I don't see any reason why a certain type of capital could not call me in private capital in Mexico. Special as I said if it comes with with the idea of partnership with the Mexican capital would you care to comment
on a general impression among Americans that a corporation to do business in Mexico has to be owned in majority by Mexican nationals. Well I think I mention it that that is in general the tendency and in fact I think it's already the case in mining and I understand I'm not really quite sure this moment that there is either a lot at all that has to be this about to be passed or that has been already been approved to that effect. So I think that in the future that will be the case. That does not affect However their business already exists and in Mexico such as Enterprise States companies us General Motors or Palmolive or Ford or any of that is in Mexico and probably has perhaps a hundred percent of foreign capital you know of course can't go on because this law could not be retroactive. What about mining is there any danger that mining corporations will be
asked to divest themselves of part of their shares in their Mexican holdings. Well I wouldn't say a danger. I think that's a possibility yes. A recent flurry of news dispatches in this country indicates that some demonstrations against the United States have been provoked by or have come out of the Cuban situation in Mexico. Would you care to comment on one of these flurry of flurries really mean any diminution of the friendship of Mexico for Americans and for the future of their business opportunities there. Yes I think it's very I'm very happy you asked me this question because I had been asked by many other Americans what I have been here. My very frank opinion is that he has not. It does not mean a decrease or the diminution of the friendship of the Mexican people or the Mexican government doors of the government the United States of the of the Americans. It
means however that the anti-American feeling that exist in Mexico for many reasons but mainly because of the way we teach our history that feeling has been exploited taken advantage of by people who wanted to profit by this invasion of Cuba and create in Mexico a new anti-American attitude. I don't believe this in if. And the danger that will happen because the people of Mexico and the government are very conscious of this situation and I think that we are able to distinguish between Mexican fundamental interests and those of other nations. Doctor but there is an old saying that tourism in Mexico is an industry without smokestacks. Don't you believe that the
flurries that have been mentioned by Dr Nelson has cause a reduction in the tourist trade going into Mexico. I think that so far the one kind of feeling impact it but it's quite possible that it will happen and it will be serious to Mexico because you know med. Perhaps it is because of my six years of minister of finance but we always worried about the new currency and one of the important sources of dollars of foreign currency for us he said and it too is traffic. I think that will be very unfortunate for the Mexican economy. Should that happen at the same time I don't expect that things will get worse. And what has already happened is not very important to the southern third of Mexico is generally spoken of as the underdeveloped part of the republic. Would you could care to comment on policy and prospects with respect to that region.
I know you've already mentioned you could. What leaves a considerable region. Not very much touched. Yes well you're right. The south part of Mexico which theoretically is very rich because that's the part clay drains vegetation is very looks here and where life is easy. It is the most on the develop part of Mexico the northern part is obviously more prosperous. I was mentioned in the case of the pop up on Project. There is also there are the two new projects of the similar nature the one of the sus which is already started and the one of the reverse which we are supposed to do have new relation programs and electrification programs which will create new sources of labor.
The one that is already completed are the same type. It's not exactly south but it's also the region which is on the developed. I'm talking about me talk on. We had Gen. Al Cardenas the head of the commission at that pic Commission and he did a very very good job developing them and irrigation program opening up. Neal you know plants and you know industries and with they also look to creation of the region. And we feel that that would be the way to develop the south. Doctor but that the most students of public finance that know Mexico are inclined to qualify the Mexican tax system as a somewhat regressive that is tending to bear more heavily on lower incomes and interfere with consumption and is perhaps inadequate to maintain the ambitious public investment system by which the republic catalyzes and galvanizes its economic development
program. Would you comment on the tax system and its possibilities for reform in the calculable future. Well there is no question that our system our tax system is very very backwards. I did my best. Darkness they should see trying to help but that in the time I had the responsibility and we did improve it I am proud to say I am going away from taxation on consumption and doors. Income tax which of course is being the best tax to correct the by this division of wealth and also to put the burden where it should be put. But you know it's very difficult to get money out of the people. There is nothing saw that the president objects more than to his minister of finance come in and tell him how it is necessary to
get more money out to the people and therefore become very unpopular. At the same time it is depressing who is always asking the minister of finance for more money for new projects so that the poor man he saw was in trouble that way. So is the minister of finance. But I think that something should be done specially because at the present time the income tax in Mexico has not grown proportionally with the growth of the country in other words the national income has gone up faster than the product of being of this tax and that's entirely wrong. It should be a least parallel or better to steal the income tax you get more money out of the national income they used to. I think the Knicks can live a happy I'm not in the position to do anything about. Thank you Doctor but that this has been Mexican economy past present and future with Dr Raymone But Tate a Mexican economist and publisher of Nova days
Speaking of Mexico: English
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This series discusses issues related to Mexican life, government, and culture. This is the English-language version of Speaking Of Mexico.
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