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Competition Policy in Mexico: A Tale of a Developing Country - Chapter 2 - International Antitrust Law & Policy: Fordham Competition Law 2010
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Originally from: International Antitrust Law & Policy: Fordham Competition Law 2010 - Hardcover International Antitrust Law & Policy: Fordham Competition Law 2010 - PDF
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COMPETITION POLICY IN MEXICO:
A TALE OF A DEVELOPING COUNTRY
Eduardo Pérez Motta* I. INTRODUCTION
After the Second World War II, for more than four decades the
Mexican economy was characterized by strong protectionism and heavy
government intervention to shelter existing domestic firms from foreign
competition.
During this period, the State was very involved in regulatory activity
in almost every economic sector, by controlling entry and exit of
competitors, applying generalized price controls, imposing restrictive
regulation on foreign investments destined for the production and
distribution of products and the exploitation of natural resources.
Moreover, the government’s preponderant role in the economy was
intensified when it took control over a number of private firms justified on
the grounds either of preserving employment or to avert bankruptcies.
In consequence these governmental actions created conditions that
favoured rent dissipation, discouraged efficient resource allocation and
innovative production methods, and eventually discouraged
entrepreneurial creativity and drove the country into a path of lagging
competitiveness.
Furthermore, it resulted in a highly concentrated and poorly
performing industry that inefficiently used its resources, and that lacked
incentives to provide consumers with high quality products at low prices.
By the beginning of the eighties, the Mexican government faced
serious economic and fiscal problems and had no choice but to conceive a
series of urgent economic reforms to abandon its traditional state-led
development strategy. Even to the interest groups that benefited from the
status quo – such as state monopolies, unions, government contractors,
business chambers, etc. – it was clear that the government’s approach
needed to change as the country faced a poorly performing industry and
had to cope with macroeconomic instability that arose from a growing
reliance on petroleum revenues and increased indebtedness.
Hence, important reforms began to be implemented, such as the
renegotiation of the terms of the foreign debt, devaluation of the peso,
recovery of competitiveness and restitution of the lost confidence from
Eduardo Pérez Motta, President, Federal Competition Commission, Mexico City
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