The Mexican 1994 crisis

Abstract: The Mexican 1994 crisis is also known as the Mexican pesos crisis, is the first global economic crisis in XX century. The crisis started at 1994 and affected whole world, especially Latin America. The crisis started with the sudden devaluation of the Mexican peso. But the root of the crisis runs deeper: it started a few decades earlier. At the beginning of the decade of 1930 after Mexican Revolution and a few years of instability, Mexico entered in political stability and the result of that was an economic growth. Through the years Mexico became more and more a developed country. Until 1968 Mexico had been living what is known as the Mexican miracle. After this year economic and political crisis started. A few years during the late 1970s oil boom created a feeling of economic stabilization, but that was just a mirage. Many wrong decisions in the economic and political aspect destroyed the achieved progress. With not enough preparation, Mexico entered in organizations like the General Agreement on Tariffs and Trade (GATT) and the North American Free Trade Agreement (NAFTA), the latter was a ruinous move for a closed economy. The result of those policies was the 1994 crisis and the so called Tequila Effect. This paper explores the historical background of the Mexican 1994 crisis with the purpose of having a better understanding of the reasons and factors leading to such crisis. Key words: Mexico; United States of America; economical policies; Institutional Revolutionary Party; Mexican miracle; oil boom; NAFTA; economical crisis