Since the colonial era, the economic history of Mexico has been characterized by resource extraction, agriculture, and a relatively underdeveloped industrial sector. Historically, Mexico has been characterized by high levels of inequality, with one of key conflicts being about land reforms, pitting large landowners against peasants.
New Spain was envisioned by the Spanish crown as a supplier of wealth to Iberia, which was accomplished through large silver mines and indigenous labor. The Independence of Mexico in 1821 was initially difficult for the country, with the loss of its supply of mercury from Spain in silver mines.John H. Coatsworth, "Obstacles of Economic Growth in Nineteenth-Century Mexico", American Historical Review, vol. 83, no. 1 (Feb. 1978) p. 86.
The mid-nineteenth-century Liberal Reforma (ca. 1850–1861; 1867–76) attempted to curtail the economic power of the Catholic Church and to modernize and industrialize the Mexican economy. Following the Reform War and the Second French intervention, the late nineteenth century found political stability and economic prosperity during the Porfiriato (1876–1911). Mexico was opened to foreign investment and, to a lesser extent, foreign workers. Foreign capital built railway networks that linked regions of Mexico to major cities and ports. The mining industry revived in the north of Mexico, and the petroleum industry developed in the north Gulf Coast states with foreign capitals.
Regional civil wars broke out in 1910 and lasted until 1920, collectively known as the Mexican Revolution. The Mexican Constitution of 1917 gave the Mexican government the power to expropriate property, which favored land reform through the creation of ejidos and the Mexican oil expropriation of 1938.
Mexico benefited from its participation in World War II, and the post-war years experienced what has been called the Mexican Miracle (ca. 1946–1970). This growth was fueled by import substitution industrialization (ISI). Large oil reserves discovered in the Gulf of Mexico in the late 1970s led the country to borrow heavily from foreign banks with loans denominated in U.S. dollars. When the price of oil dropped in the 1980s, Mexico experienced a severe financial crisis.
From the 1980s, Mexico implemented neoliberal economic policies and made constitutional changes to promote the private sector.
In the twenty-first century, Mexico has strengthened its trade ties with China, but Chinese investment projects in Mexico have hit roadblocks in 2014–15. Mexico's continued dependence on oil revenues has had a deleterious impact on the economy, as it happened in the 2010s.Tracy Wilkinson, "Mexico, buffeted by low oil prices, cuts spending", Los Angeles Times, January 31, 2015, p. A7
Economy of New Spain, 1521–1821
Mexico's economy in the colonial period was based on resource extraction (mainly silver), on agriculture and ranching, and on trade, with manufacturing playing a minor role. In the immediate post-conquest period (1521–40), the dense indigenous and hierarchically organized central Mexican peoples were employed as labor and producers of tribute goods for Spanish conquerors. The tribute and labor of Indigenous communities (though not their land) were granted to individual conquerors in an arrangement called encomienda. Conquerors built private fortunes not so much through plunder as through the labor and tribute and the acquisition of land in areas where they held encomiendas, translating that into long-term sustainable wealth.James Lockhart, "Encomienda and Hacienda: The Evolution of the Great Estate in the Indies," Hispanic American Historical Review 49:3(1969) 411–29Ida Altman, Sarah Cline, and Javier Pescador, The Early History of Greater Mexico, Pearson 2003, 163–64.
The colonial landscape in central Mexico became a patchwork of different sized holdings by Spaniards and indigenous communities. As the crown began limiting the encomienda in the mid-sixteenth century to prevent the development of an independent seigneurial class through the New Laws, Spaniards who had become landowners acquired permanent and part-time labor from Indigenous and mixed-race workers. Although the encomienda was a major economic institution of the early period, it was gradually abandoned due to the drop in indigenous populations, economic growth and the expansion of the number of Spaniards in New Spain.Ida Altman, Sarah Cline, Javier Pescador, The Early History of Greater Mexico, Pearson 2003, p. 162.
Mining
Silver became the motor of the Spanish colonial economy both in New Spain and in Peru. It was mined under license from the crown, with a fifth of the proceeds (quinto real) rendered to the crown.D.A. Brading and Harry E. Cross, "Colonial Silver Mining: Mexico and Peru," Hispanic American Historical Review 52:4(1972): 545–79. Although the Spaniards sought gold, and there were some small mines in Oaxaca and Michoacán, the big transformation in New Spain's economy came in the mid-sixteenth century with discoveries of large deposits of silver.Altman et al, Early History of Greater Mexico p. 169. Near Mexico City, the Nahua settlement of Taxco was found in 1534 to have silver.Robert S. Haskett, "Our Suffering with the Taxco Tribute: Involuntary Mine Labor and Indigenous Society in Central New Spain," Hispanic American Historical Review 71:3(1991): 447–75.
The largest silver deposits were found north of the densely populated zones of Indigenous communities and Spanish settlements. Zacatecas and later Guanajuato became the most important centers of silver production, but there were many others, including in Parral (Chihuahua) and later strikes in San Luis Potosí, optimistically named after the Potosí silver mine of Bolivia. Spaniards established of cities in the mining region as well as agrarian enterprises supplying foodstuffs and material goods necessary for the mining economy. For Mexico, which did not have a vast supply of trees to use as fuel to extract silver from ore by high heat, the invention in 1554 of the patio process that used mercury to chemically extract the silver from ore was a breakthrough.Alan Probert, "Bartolomé de Medina: The Patio Process and the Sixteenth Century Silver Crisis" in Bakewell, Peter, ed. Mines of Silver and Gold in the Americas. Variorum: Brookfield, 1997. Spain had a mercury mine in Almadén whose mercury was exported to Mexico. (Peru had its own local source of mercury at Huancavelica). The higher the proportion of mercury in the process meant the higher the extraction of silver.
The crown had a monopoly on mercury and set its price. During the Bourbon reforms of the eighteenth century, the crown increased mercury production at Almadén and lowered the price to miners by half resulting in a huge increase in Mexico's silver production.Altman et al, The Early History of Greater Mexico p. 290. As production costs dropped, mining became less risky so that there was a new surge of mine openings and improvements.Altman et al, The Early History of Greater Mexico, p. 291. In the eighteenth century, mining was professionalized and elevated in social prestige with the establishment of the royal college of mining and a miners' guild (consulado), making mining more respectable. The crown promulgated a new mining code limiting liability and protecting patents for technical improvements.Altman et al., The Early History of Greater Mexico p. 291. Highly successful miners purchased titles of nobility in the eighteenth century, valorizing their status in society as well as bringing revenues to the crown.Altman et al, The Early History of Greater Mexico p. 292.Doris M. Ladd, The Mexican Nobility at Independence, 1780–1826. Austin: University of Texas Institute of Latin American Studies 1976.
Wealth from Spanish mining fueled the transatlantic economy, with silver becoming the main precious metal in circulation worldwide. Although the northern mining did not itself become the main center of power in New Spain, the silver extracted there was the most important export from the colony.Peter Bakewell, Silver Mining and Society in Colonial Mexico: Zacatecas 1546–1700. Cambridge: Cambridge University Press 1971. The control that the royal mints exerted over the uniform weight and quality of silver bars and coins made Spanish silver the most accepted and trusted currency.
Many of the laborers in the silver mines were free wage earners drawn by high wages and the opportunity to acquire wealth for themselves through the pepena systemFor their troubles, they were compensated with real salaries and, “far more important,” as Bishop Mota y Escobar perceptively wrote, “with silver ore that they got to keep and which they call among themselves pepena.” Indeed, after doing their daily work, free Indians were permitted to collect any silver-encrusted rocks they wanted. They could then sell this valuable ore in the black market or attempt to refine it into pure silver on their own. The pepena system existed in many mines throughout Mexico... Reséndez, Andrés. The Other Slavery: The Uncovered Story of Indian Enslavement in America (Kindle Locations 1857-1861). Houghton Mifflin Harcourt. Kindle Edition. which allowed miners to take especially promising ore for themselves.Already by the late sixteenth century, free wage earners outnumbered forced workers in some mines. More recent studies have revealed a sobering reality, however. While salaried workers did indeed account for a significant percentage of the workforce in many mines— including thirty-six percent of all Indians in Parral— these workers did not replace coerced laborers, but rather coexisted with them.
Reséndez, Andrés. The Other Slavery: The Uncovered Story of Indian Enslavement in America (Kindle Locations 1863-1866). Houghton Mifflin Harcourt. Kindle Edition. There was a brief period of mining in central and southern Mexico that mobilized indigenous men's involuntary labor by the repartimiento, but Mexico's mines developed in the north outside of the zone of dense indigenous settlement. They were ethnically mixed and mobile, becoming culturally part of the Hispanic sphere even if their origins were indigenous. Mine workers were generally well paid with a daily wage of 4 reales per day plus a share of the ore produced, the partido. In some cases, the partido was worth more than the daily wage. Mine owners sought to terminate the practice. Mine workers pushed back against mine owners, particularly in a 1766 strike at the Real del Monte mine, owned by the Conde de Regla, in which they closed down the mine and murdered a royal official.Doris M. Ladd, The Making of a Strike: Mexican Workers’ Struggles in Real del Monte, 1766–1775. Lincoln: University of Nebraska Press 1988. In the colonial period, mine workers were the elites of free workers,Altman et al., The Early History of Greater Mexico, p. 293.
Agriculture and ranching
Although pre-Hispanic Mexico produced surpluses of corn (maize) and other crops for tribute and subsistence use, Spaniards began commercial agriculture, cultivating wheat, sugar, fruit trees, and even for a period, mulberry trees for silk production in Mexico.Altman et al, The Early History of Greater Mexico, pp. 163–168.Woodrow Borah, Silk Raising in Colonial Mexico. Berkeley: University of California Press 1943. Areas that had never seen indigenous cultivation became important for commercial agriculture, particularly what has been called the "near North" of Mexico, just north of indigenous settlement in central Mexico. Wheat cultivation using oxen and Spanish plows was done in the Bajío, a region that includes a number of states of modern Mexico, Querétaro, Jalisco, and San Luis Potosí.