Economics in terms of Mexico can be explained through two theories, Conventional Theory, and Rational Theory. The Conventional Theory essentially states that the cause of unindustrialized nations is internal inefficiency and the best way to correct that problem is through outside help from developed countries. Some causes that contribute to the economic problem relating to the conventional theo

The Radical theory states that the cause is international exploitation by exactly these developed “friends,” and the cure is a fundamental change of international relations between the poor and rich. For example, the NAFTA agreement was suppose to help the economy of Mexico, and some say it has as I stated earlier. But NAFTA has also been criticized as an exploitation of Mexican workers. U.S. companies have crossed the border down south and built factories in Mexico. The idea was to boost the economy in Mexico. Even though trade between NAFTA countries has grown from $297 billion in 1993 to $676 billion in 2000, real wages in Mexico have dropped (Carlson, L). Seven years after NAFTA’s institution in 1994, sources say the number of poor has doubled in the last seven years.

The solution to these problems, according to the conventional theory, is to get these types of economies to reach a “takeoff” to self-sustaining growth only under conditions of rapid capital accumulation. In Mexico’s case the solution would be foreign direct investment. This is when foreign governments and corporations actually enter the developing economy and create production facilities. Some of the advantages are more jobs for indigenous workers and more advanced technologies are brought as well as taught to the developing country. NAFTA (North American Free Trade Agreement) is one of the ways in which Mexico has benefited from this. From 1994 through 2001, U.S. manufacturing companies invested an average of $2.2 billion a year in factories in Mexico. Some feel that NAFTA has deepened and institutionalized Mexico’s drive to modernize and liberalize its economy and political system.

The trends described were arrested and partially reversed by the economic crises and high inflation of the 1980’s, as upper-status people were better able to protect themselves against inflation than could the poor.

As for politics in Mexico I will focus on three ideas which are present in most developing nations, excessive urbanization, luxury consumption (income distribution) and the dependence on the U.S.

Corruption has been a growing problem in Mexico. Seeing how Mexico

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