The impact of international economic relations on Mexico

The purpose of this study is to investigate the trends in the foreign economic transactions of Mexico from 1939 to 1954 and to assess the impact of international economic relations upon the direction and volume of domestic production, the quantity of monetary reserves, the standard of living and the economic progress of Mexico as a whole. From 1939 to 1954 important economic changes, influenced by world conditions, took place in Mexico. The understand these developments, international trade, the balance of international payments and foreign investments were examined. Available statis.tical data were studied to determine trends, variations and changes in these areas and their impact on the Mexican economy and government policy. Aspects of foreign trade which were considered were the trends in the value and volume of exports and imports, changes in the general composition of trade and in individual items, the destinations and sources of goods and the importance of international commerce to the domestic economy. The development and implementation of government policy with respect to foreign trade were also studied. The general trends in Mexico's balance of international payments were considered. Current transactions, including trade balances, invisibles and terms of trade, and capital transactions, including private direct investment, loans from international lending agencies, compensatory financing and errors and omissions, were analysed. An assessment of the impact of disequilibria on the Mexican economy was attempted by considering the influence of the balance of payments on monetary reserves, dollar holdings, money supply, wholesale prices, income and wages and Mexico's capacity for external payments. To evaluate the role of capital imports in Mexican economic development, comparisons of the trends in domestic and foreign investments were made. Trends, uses and sources of capital imports, including direct investments and public loans and grants, were investigated. Aspects of the investment climate and of government policias were studied. During the period from 1939 to 1954 imports and exports expanded both in value and volume. Exports became more diversified; but imports, through government direction, were concentrated in capital goods. World War II extended the geographical scopo of trade, but the United States and Canada remained Mexico's chief trading partners. The net international account of Mexico was alternately active and passive from 1939 through 1954. Significant contributions to current transactions were made by trade, tourists and migrant workers. International financial organizations and bilateral commercial agreements also made positive contributions. Nationalization debts and government loans, however, made heavy drains on the balance of payments. Monetary management, prices. Income, wages and the capacity of external payment were all affected by variations in the international balances of payments. Foreign investments tended to be redirected daring the 1939 to 1954 period. Emphasis was placed on production for Mexican markets rather than for export. Organizationally, foreign enterprises were converted to Joint investment ventures. Government policy toward foreign investment consisted of a combination of incentives and deterrents, creating a climate that was not as conducive as it might have been to foreign investment. International economic relations affected all sectors of the Mexican economy. The development and maintenance of active balances of international payments should, therefore, be the chief concern of government policy. Government policy should encourage the expansion of exports, tourists receipts and capital inflows. Nationalization programs and projects concerned with economic overhead capital should be coordinated to increase dollar holdings and monetary reserves and to contribute to the general stability of the economy.