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The border industrialization program and the relative autonomy of the Mexican state

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The border industrialization program and the relative autonomy of the Mexican state
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Holland, Lynn
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Industries -- Mexico ( lcsh )
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Industries ( fast )
Economic policy -- Mexico ( lcsh )
Mexico ( fast )
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Bibliography:
Includes bibliographical references (leaves 151-157).
General Note:
Submitted in partial fulfillment of the requirements for the degree of Master of Arts, Department of Political Science.
Statement of Responsibility:
by Lynn Holland.

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Full Text
THE BORDER INDUSTRIALIZATION PROGRAM
AND THE RELATIVE AUTONOMY OF THE MEXICAN STATE
by
Lynn Holland
B. A., Occidental College, 1977
A thesis submitted to the
Faculty of the Graduate School of the
University of Colorado in partial fulfillment
of the requirements for the degree of
Master of Arts
Department of Political Science
1986


This thesis for the Master of Arts degree by
Lynn Holland
has been approved for the
Department of
Political Science
by
Date
V

{


xir
Holland, Lynn (M.A., Political Science)
The Border Industrialization Program and the Relative
. Autonomy of the Mexican State
Thesis directed by Associate Professor Joel C. Edelstein
and Associate Professor Jana Everett
This study of the Border Industrialization Pro-
gram (BIP) in Mexico focuses on its implications for the
autonomy of the Mexican state. State autonomy is deter-
mined by three criteria. The first two deal with the
state's ability to perpetuate itself as a mediator
between class interests. Thus autonomy is measured
first by the state's ability to act apart from the
immediate interests of the dominant class and second, by
the ability to perpetuate its image as a legitimate
representative of working class interests. The third
respect in which state autonomy is evaluated as a result
of the BIP is its ability to secure resources by which
to reproduce itself.
The history of state relations with the border
economy reveals a shift in policy marked by the BIP.
Whereas through past border programs, the state regarded
the pressures of U. S. capital as a force to be
resisted, the government now identifies Mexican national
interests with those of U. S. capital.
The circumstances of the program's implementa-
tion which included the exhaustion of the nations debt-


led growth model and unrest in the interior suggest that
the program is a national rather than regional one. Its
success in addressing national problems and failure to
meet regional goals give further evidence of its
national orientation. From among its stated goals, its
single most important area of success appears to be the
enrichment of the central government.
While the program brings jobs to the region,
it provides little long term job security. Further-
more, by stimulating migration and employing mainly
women not previously in the paid labor force, the pro-
gram actually increases unemployment in the region.
Hardship and the declining support of government unions
have led to autonomous union activity on the part of
workers.
With regard to the state's ability to secure
resources for its own purposes, a short term ability
tied to the day-to-day functioning of the program, state
autonomy appears to have increased. Yet its ability to
act apart from the immediate interests of capital and
perpetuate its image of legitimacy is in decline, long
term results of the BIP with lasting structural effects.


V
.ACKNOWLEDGEMENTS
I would like to thank Joel Edelstein, Jana
Everett and Larry Mosqueda for their guidance and
generous support during the writing of this thesis and
throughout my studies at UCD; Pat Baldwin for her
patience and diligent work on the word processor; and
Ross Buchanan for the love and encouragement that made
this work possible.


vi
CONTENTS
CHAPTER
I. INTRODUCTION................................. 1
II. DEPENDENT DEVELOPMENT AND THE MEXICAN STATE . 24
III. HISTORY OF BORDERLAND DEVELOPMENT ........... 54
IV. THE BIP, THE ECONOMY AND THE BORDER
POPULATION . ....................... 96
V. CONCLUSION ...____'....;................. 143
BIBLIOGRAPHY
150


CHAPTER I
INTRODUCTION
The focus of this study of the Border Indus-
trialization Program (BIP) in Mexico is the contradic-
tory effects that the program has had on the autonomy of
the Mexican state. On one hand, the state has benefited
from the program through revenue enhancement and short
term solutions to the problem of worker dislocation and
employment. On the other hand, it has bought these
benefits at the expense of its long -run economic con-
trol over its northern territory. In addition, the very
authority of the Mexican state which has derived from
its historic role as a mediator between labor and
capital is declining.
In his 1965 national address, Mexican President
Gustavo Diaz announced plans for the Border Industriali-
zation Program to be fully.implemented by 1967. The
northern border area had been characterized by a rapid
population growth rate the highest in Mexico since
1940. The BIP was an immediate response to the pressing
problem of unemployment which accompanied that growth.
In addition, the United States government, in response


2
to pressures from U.S. labor, had brought the U.S.-
Mexican "bracero program" to a halt in 1965. This
program had brought contracted Mexican labor to the U.S.
during World War II and the Korean War when critical
labor power was in short supply. The program had
continued through the mid-1960s amid increasing pro-
tests from organized labor in the U.S. From 1956, the
peak year for the number of workers in the program,
until the program was terminated, former bracero workers
had been repatriated to Mexico. Many of these workers
had remained at the northern border in the hope of
returning to the U.S. to work. Increasing political
unrest along the border during this period was
associated with these high rates of unemployment and the
frustrated expectations of Mexican workers.
Mexican government officials in the Ministry of
Industry and Commerce had observed U.S.-owned assembly
operations in other less developed countries and had
hoped to attract some of this industry to Mexico where
it might enjoy the advantages of proximity to home based
operations. These assembly operations were the
beneficiaries of U.S. Tarriff Codes 806.30 and 807.00
which allowed American-made products to be assembled in .
foreign countries, either in whole or in part, and
returned to the U.S. with duty payment on value-added
only. This value-added (value derived from non-U.S.


3
portions) has been almost entirely that of the low paid
foreign labor used in the assembly process.
The primary goals of the program proclaimed by
the Mexican government were to alleviate the troublesome
unemployment problems of the border region and to
increase the standard of living in that areas. The
government also hoped to bring modern methods of manu-
facturing into the Mexican economy, provide workers with
technical skills and training, increase the consumption
of Mexican raw materials, and reduce the trade deficit
9
through the program.
In conjunction with U.S. Tariff Code sections
806.30 and 807.00 and import duties and quotas, the BIP
originally allowed the assembly of U.S. products within
a twenty-kilometer wide strip along the border, and
their duty free return to the U.S. with import taxes on
o
value-added only. While investors could not compete
for Mexican markets, the Mexican government provided
numerous other incentives for participation in the BIP.
Tax responsibilities and property ownership requirements
were waived. Participating companies were permitted to
bring in all necessary managerial and high skilled
labor.
From the perspective of U.S. foreign investors,
the program provided a ready source of cheap labor
combined with the duty free import of U.S. inputs into


4
the Mexican assembly operations, and the conveniences of
proximity. These advantages were critical in light of
post 'World 'War II developments in industry. The war
period had brought an upsurge in product innovation,
production, and consumption in the U.S. By the 1950's,
however, rapid diffusion of technology had yielded much
competition at home and abroad. In addition, the rise
of unions in the U.S. meant higher labor costs. As
competition grew, price manipulation no longer provided
a means to increase profits. Manufacturers thus turned
to cost cutting to serve this end. Two developments
enabled them to cut labor costs substantially. First,
the labor intensive or productive aspect was divided
from the capital intensive or conceptual aspect
including entrepreneurial tasks, and research and
development. Second, the productive sector itself
became increasingly subdivided and routinized in an
effort to "deskill" tasks and thus make individual
workers more expendable and less threatening to profits.
Together, these developments enabled certain industries
to relocate the labor intensive portion of their opera-
tions to where advantages are greatest -- i.e.
geographic centers of cheap labor -- as it became
necessary;
Since 1967, Mexico has been the largest
assembler of U.S. components for export to the U.S.^


5
In the late 1970fs Mexico provided 10% of the aggregate
value-added in all U.S. operations in foreign countries
and 30% of all dutiable value among less developed
countries. From 1966 to 1980 the products of these
plants increased from $7 million to $2.3 billion in
value.
Two major Industries in the U.S. have followed
this pattern of development and together comprise about
80% of the foreign investment in the BIP. These
industries are electronics and textiles.^ The first of
these, the electronics industry, boomed after the war,
producing consumer goods, industrial goods, government
and military goods, and components. The industry is
highly centralized with six companies making over 92% of
the sales of all mainframe computers. It is also
fiercely competitive both at home and abroad. Rapid
technological innovation and diffusion make large scale
investments impractical. Thus the need for a certain
amount of fixed capital and materials have prevented
cost cutting and innovation in the capital intensive
segment. For cutting costs and needed adjustments, the
industry has turned instead to the labor intensive seg-
ment. Thus the largest firms all have offshore assembly
plants in less developed countries which import under
sections 806.30 and 807.00 of the Tariff Code while
maintaining research and development operations in the


6
U.S. By 1977, 38% of the assembly plants, or maquil-
adoras, assembled electrical and electronic goods,
employing 63% of the labor force in the BIP.^
Unlike electronics, the textile industry is not
highly concentrated. It consists of many small opera-
tions comprising a large share of the market alongside a
few giants such as Levi-Strauss.^ As it is usually
the first industry to be developed during industrializa-
tion, competition from developing countries is always
stiff. In addition, because the textile industry has
relied on a large low-skilled labor intensive sector
throughout most of this century, it is far less
modernized than most. Labor intensity is preferred
because care is essential in the production of garments
and rapid changes in fashion are more easily accom-
modated by productive labor than capital equipment.
Most textile operations consist of three general
tasks: that of the manufacturer in initial production,
that of the jobber in buying fabric, design and sales,
and that of the contractors in sewing. It is this last
task, easily separated from the others, which under
Tariff Code Section 807.00, has been relocated to the
border area. This disarticulation of tasks along with
the ease with which small shops can be opened and
closed, and the textile industries traditional reliance
on cheap labor have combined to make BIP relocation an


7
advantageous move for the industry. About half of the
assembly operations in Mexicali and Tijuana are textile
firms consisting of a building and a few sewing
in
machines.
The Mexican government, however, has been less
successful, in meeting its professed goals. Assembly
plant operations in the BIP, have provided some employ-
ment in the border area and, to a lesser extent, in
interior Mexico. The group from which they have hired,
however, has not been the originally targeted group of
displaced men aged 22 to 45 years. Instead, the plants
have chosen to hire mainly young women aged 16 to 30
years whose labor is cheaper than that of men. Because
most of these women had not been in the paid labor force
before working the assembly plants, the BIP has actually
expanded the size of the paid labor force. Furthermore,
it appears that the program may actually be aggravating
unemployment since workers are generally hired on short
term contracts and, once terminated, remain in the paid
labor force. Without job security and with few oppor-
tunities for promotion within the plants, it is hard to
discern any lasting increase in the standard of living
for most assembly plant workers. As a result, U.S.
multinational companies are the beneficiaries of one the
most productive sectors of the international labor
force. In addition, assembly plants have become


8
increasingly capital intensive. The ratio of jobs to
BIP investment has peaked and appears to be declining.1^
If this trend continues there is no reason to expect
that BIP investment can provide a long term solution to
the problem of unemployment in the border areas.
The Mexican government has fallen short of
several of its other goals as well. The skills involved
in assembly are minimal and often obsolete, and few
Mexican workers are able to move up in the operational
hierarchy. Technology transfer through the program has
also been limited and the Mexican government has been
unable to improve its balance of payments through the
program. This is largely because entrepreneurial and
managerial control has remained in the hands of foreign
mainly U.S. operators. This has prevented the
government from establishing forward and backward
linkages to the Mexican economy.
The purpose of this study is to examine the BIP
in light of its implications for the power of the
Mexican state. The study looks specifically at the
state's relative autonomy with regard to international
capital and its ability to bargain with foreign
interests in behalf of national development. In the
following discussion, I will review several perspectives
on the autonomy of the state including the Marxian


9
instrumentalist and Marxian structuralist perspectives
and a neo-Weberian perspective.
The instrumentalist position on the state taken
by such theorists as Ralph Miliband and William Domhoff,
is that the state is controlled by the dominant class
and made the instrument for carrying out the interests
1C
of that class. The main objective of these and other
instrumentalists has been to expose the linkage between
the capitalist class in advanced capitalist societies
and the state apparatus. Marxist instrumentalist Ralph
Miliband justifies Marxist support for an instrumenta-
list approach by referring to Marx' and Engles' state-
ment in the Communist Manifesto that "the modern state
is but a committee for managing the common affairs of
the whole bourgeoisie."^
Instrumentalists are to be credited with several
contributions to the body of theory on the structure of
the state. First, by applying a class analysis to the
study of the state, they debunk the pluralist theory of
the state in capitalist society as simply the product of
1 7
competing parties or interests groups. Second,
instrumentalism generally recognizes the existence of
competing segments of the dominant class although this
is not a chief feature of the perspective. Miliband,
for example, points out:
... that there does exist a plurality of economic
elites in advanced capitalist, societies; and that


10
despite the integrating tendencies of advanced cap-
italism these elites constitute distinct groupings
and interests, whose competition greatly affects the
political process.10
Third, the instrumentalist perspective recog-
nizes the role of the state in maintaining the necessary
cohesion among the disparate elements of the dominant
class. The state does so by clarifying and elevating
the areas of consensus within which limited public
*
debate may take place:
. . differences and controversies (regarding state
intervention) even at their most intense, have never
been allowed by the politicians concerned to bring
into question the validity of the 'free enterprise'
system itself; and even the most determined inter-
ventionists among them have always conceived their
proposals and policies as a means, not of eroding --
let alone supplanting the capitalist system, but
of ensuring its greater strength and stability.1^
Fourth, instrumentalists recognize that the
state may in fact be required to act against the
immediate interests of one or more segments within the
dominant class in order to fulfill its ultimate goal of
maintaining the class structure:
The state's 'interference' with that (unrestrained
private economic ) power is not in 'fundamental
opposition' to the interest of property: it is
indeed part of that 'ransom' of which Joseph
Chamberlain spoke in 1885 and which, he said, would
have to be paid precisely for the purpose of- main-
taining the rights of property in general. . .
even very conservative governments in the regimes of
advanced capitalism have often been forced, mainly
as a result of popular pressure, to take action
against certain property rights and capitalist
prerogatives.


11
This recognition of semi-independent action on
the part of the state should lead to the conclusion that
the capitalist state possesses a degree of autonomy or
independence in regard to the dominant class. This,
however, is not a primary concern for instrumentalists.
It is a focal point, however, for structuralists
discussed below.
A final contribution of instrumentalism is its
development of the notion of "legitimation". Legitima-
tion, according to Miliband and numerous other Marxist
theorists is the process by which the state projects
itself as a neutral or otherwise supreme authority.
Often this includes the notion that the state is
concerned only with the judicious mediation of disputes
between interest groups. Through this process, the
state is able to prevent public awareness that it is
controlled by the dominant class. Furthermore,
These procedures form, in fact, an additional
element of restraint upon organised labour, and also
serve the useful purpose of further dividing the
trade union ranks. The state does interpose itself
between the 'two sides of industry' not, however,
as a neutral but as a partisan. 1
In instrumentalist theory then, the outputs of
the state are a product of dominant class interests.
The state must maintain an image of superiority to these
interests, however, in order to reproduce the prevailing
class structure. The task for Marxists, according to


12
the instrumentalist analysis, is to expose the class-
bias of the state particularly to those most oppressed
by it.
Among instrumentalists, the notion of state
autonomy is only implied. Structuralists such as Nicos
Poulantzas and Claus Offe bring the issue of relative
state autonomy into the foreground. They also emphasize
the importance the role of the state in maintaining
cohesion within the dominant class and projecting itself
as a legitimate representative of the interests of the
OO
masses. Poulantzas takes these arguments a step
further by saying that the state must actively prevent
the dominant class from achieving hegemony within the
political economic system.
The instrumentalist perspective has been
criticized for overemphasizing the power of influential
individuals and disregarding the importance of social
04
structures in determining the nature of the state.
The instrumentalist emphasis on the power of certain
economically situated individuals leads problematically
to the notion of the state as a neutral vehicle. Paul
Baran and Paul Sweezy have drawn attention to the impor-
tance of economic contradictions in determining state
behavior. Only within this framework, they.contend, can
OK
an instrumentalist analysis be useful. Similarly,
Poulantzas argues that the influence of various classes
is in part determined by the nature of the state and


13
that class conflict actually takes place within the
framework of the state. This latter contention can be
carried a step further by assuming, dialectically that
class conflict', in turn, determines the nature of the
state.
Poulantzas and other structuralists have been
criticized for having conceived of the state and
economic classes too rigidly and categorically, leaving
little room for assessing the historic and dynamic rela-
tions between these entities..^ This rigidity has
prevented structuralists from seeing the dynamic inter-
action between the state and the class structure.
Poulantzas has also been criticized, much as the
instrumentalists have been, for viewing the state too
strictly in terms of dominant class interests. He
ignores the possible role of the state as mediator in
class conflict. In this role, the state must grant
certain, if minimal, concessions to subordinate classes
which manage to gain political influence.
In a review of recent literature responding to
these inadequacies, Bob Jessop concludes that 1) the
process of state transformation is determined by class
struggle, 2) that periods of crisis are an indication of
the state's inability to maintain the hegemony of the
dominant class, and 3) that it is during periods of
97
crisis that the state in restructured. '
Claus Offe


14
also recognizes the importance of crisis in determining
the nature of state action. This includes in
particular, the need on the part of the state to inter-
vene on behalf of continued capital accumulation.^ He
is criticized, however, for neglecting the role of the
working class in shaping the structure of the state
during periods of class conflict. This dynamic role is
critical in understanding the transformation of the
state. Esping, Andersen, Freidland and Wright observe
that '
The critical point ... is that political challenge
by the working class shapes the historical develop-
ment of state structure. The actual structures of
the state are thus not a simple reflection of cap-
italist interests, but a contradictory reflection of
the class struggle between workers and
capitalists. y
Furthermore,
As the state comes increasingly to be a necessary
force in the development and regulation of the
capitalist economy, as economic concentration and
centralization render small disproportionalities and
downturns increasingly dangerous and volatile, the
political neutralization of an organized working
class through structural change in the state has
become more imperative for capitalist growth. u
In the corporatist model, the state coopts the
working class struggle by incorporating working class
leadership into the state apparatus. This enables the
state to control the demands of labor in the interest of
capital accumulation. The corporatist model is particu-
larly relevant to countries which, historically, have


15
been subject to the external pressures of foreign
capital. Such countries typically have a weak, under-
developed and decentralized capitalist class as a result
of these pressures.
The onset of the Mexican Revolution in 1910 was
the crisis during which the Mexican state was forced to
undergo the reformations necessary to the continuation
of capital accumulation. These included not only the
cooptation of the working class struggle through its
incorporation into the state structure, but the decisive
split of this class into controlled divisions as well.
As Bill Warren points out, this control over the
O 1
working class has not come without a price. In return
for its cooperation within the state structure the
leadership of the workingclass receives certain economic
concessions. The Mexican state illustrates this
principle well. Oh one hand, the Mexican Revolution
brought an end to the highly developed political power
of the working class. This power had grown out of
working class unity and consciousness during inter-class
conflict. On the other hand, in exchange for their
complicity, the post-revolutionary state dispensed
economic rewards in the form of wage supports and social
services to workers in state controlled unions.
Nora Hamilton points out the importance of a
weakened national capitalist class for the development


16
of autonomous state power in Mexico. Historically, the
national capitalist class has been unable to achieve
hegemony within the Mexican economy. More specifically,
it has been unable to seize the power of the state in
order to eliminate barriers to a capitalist revolution
in Mexico. These barriers included older, inefficient
land owning forms, decentralized authority, external
pressures from foreign capital and internal pressures
from subordinate classes. Thus it became necessary for
the state to carry out a "revolution from above." This
revolution resulted in a centralized bureaucracy and the
fusion of capitalist and pre-capitalist forms in the
q?
interests of capitalist industrialization.
The newly transformed state also adopted a
legitimating ideology. This ideology included a measure
of anti-imperialism derived from the working class
struggle which the state had internalized. It also
included the notion of the state as a legitimate repre-
sentative of subordinate classes in the struggle between
labor and capital. This legitimating ideology permitted
the state to continue in its more essential role as
promoter of the conditions for capital accumulation.
The contradictory effects of high levels of
state intervention and the internalization of class
conflict by the state are discussed from a neo-Weberian
OO
perspective by Peter Evans and Dietrich Rueschmeyer.


17
Various splits within the dominant class such as that
between foreign and domestic capital that between urban
industrial and agro-exporting capital, increase the
potential for state autonomy. This potential is further
enhanced when there is pressure on the state from sub-
ordinate classes and when dominant interests make pacts
among themselves for their mutual interests.
The state which has achieved relative autonomy
has greater potential for intervention in the socio-
economic development of the nation. This intervention
has the contradictory effect of both increasing and
decreasing the state's autonomy. As state intervention
increases, the state acquires greater access to
resources which further enhance state autonomy. At the
same time, state autonomy is also weakened by increased
intervention. As the state penetrates more deeply into
civil society, it becomes more of an arena for social
conflict. This internalized conflict undermines the
coherence of the state which is essential to its
autonomy. In addition, the image of the state a
"guardian of universal interests" is eroded, thereby
inhibiting the state's ability to act decisively. Thus
Evans and Rueschmeyer conclude that increased state
intervention results in the contradictory effects of
both strengthening and weakening the autonomy of the


18
state. The example of the BIP and its effects on the
state give support for this model.
For purposes of this study, the question of the
relative autonomy of the state in Mexico is defined as
the strength of its role as a mediator between capital
and labor within this reformed structure. As a mediator
it must first be capable of acting apart from the
immediate interests of capital. As will be seen, the
significant role of foreign capital in the process of
capitalist development in Mexico makes the bargaining
power of the state in regard to foreign capital a signi-
ficant aspect of this question. Hamilton has pointed
out that in Mexico the national capitalist class .
fraction which has been most closely associated with
international capital has had the greatest influence in
the state. In the late nineteenth and early twentieth
centuries this fraction was the agro-export sector. In
the post World War II period it was industrial capital.
As a result of its association with foreign capital,
this fraction has expanded at the expense of other
sectors. In this analysis of the mediating role of the
state, the interests of capital must include both its
international and domestic aspects.
The second ability which the state must have as
mediator is that of maintaining its appearance as the
legitimate representative of the subordinate classes.


19
This appearance is particularly important with respect
to foreign investment capital which has been a foremost
object of class struggle in Mexico. The state's image
as working class representative depends on its ability
to fulfill the goals which it establishes publicly on
behalf of the working class and the nation as a whole.
Finally, the state must be able to secure
resources which enable it to reproduce its bureaucratic
structure and carry out social and economic policy. To
the extent that a particular program enhances this
ability, it contributes to the autonomy of the state.
In light of these considerations, the autonomous
power of the state will be measured in terms of 1) its
ability to act apart from the immediate interests of
expanding capital; 2) its ability to perpetuate its
image as the legitimate representative of the working
class in Mexico; and 3) its accesses to resources by
which to reproduce its own structure as a result of the
BIP.
Much research has focused on the implications of
the BIP for state power in Mexico. Cameron Duncan has
concluded that the government has lost control over the
economy as a result of the BIP.^ Other studies have
viewed the BIP as yet another product of the state's
losing battle to maintain economic control over its
northern territory.^ Lay James Gibson and Alfonso


20
Renteria contend that the net effect of the BIP has been
the increased dependence of the border region on the
q f.
U.S. economy. Antonio Ugalde's analysis reveals how
the Mexican government has benefited directly from the
BIP through increased tax revenues which have enhanced
its bureaucratic power. Further, he describes the
political linkage between U.S. capital and the Mexican
government which has influenced the very design and
on
purpose of the BIP. \ This study places these findings
in a theoretical framework and focuses specifically on
the nature of state power as a result of the program.
The second chapter of this study discusses the
Mexican state as a product of dependent relations
between the Mexican economy and international capital.
The third chapter describes the historic development of
the borderlands as a reflection of the relationship
between the economies of the United States and Mexico.
The.historic autonomy of the Mexican state as revealed
in the development of the border is assessed and the BIP
is evaluated in the context of borderland development.
Chapter four is a discussion of the role of the Mexican
state in relation to the BIP and the northern region,
the economic conditions brought about by the BIP and the
political response to these conditions along the border.


21
NOTES
1. See Peter N. Kirstein, Anglo Over Bracero: A
History of the Mexican Worker in the United States from
Roosevelt to Nixon (San Francisco: R and E Research
Associates 1977) for a detailed description of the
bracero program.
2. Duncan, Cameron, "The Runaway Shop and the Mexican
Border Industrialization Program," Southwest Economy and
Society (Oct-Nov., 1976) 11
3. Baerresen, Donald, "Unemployment and Mexico's Border
Industrialization Program," Inter-American Economic
Affairs (Fall 1975) p. 84
4. Fernandez, The United States-Mexican Border, A
Politico Economic Profile (Notre Dame: University of
Notre Dame Press, 1977) p. 136
5. Dillman, "Assembly Industries in Mexico: Contexts
of Development," Journal of Inter-American Studies
(February, 1983)
6. NACLA, "Electronics: The Global Industry," Latin
America and Empire Report 11 (March, 1977)
7. Ibid., p. 7
8. Ibid.
9. Dillman, C.D., "Assembly Industries in Mexico"
10. NACLA, "Electronics"
11. Ibid.
12. Duncan, "The Runaway Shop and the Mexican Border
Industrialization Program," p. 15
13. Valdes-Villalva, Guillermina, "New Policies and
Strategies of Multinational Corporations During the
Mexican National Crisis 1982-1983," in the U.S. and
Mexico: Borderland Development and the National
Economies edited by Lay James Gibson and Alfonso Corona
Renteria (Boulder and London: Westview Press 1975)
14. See Chapter Three for more discussion on the
increasing capital intensity of BIP investment.


22
15. See Ralph Miliband, The State in Capitalist
Society: An Analysis of the Western System of Power
(New York: Basic Books, Inc. 1969) and G. William
Domhoff, Who Rules America? (Englewood Cliffs, N.J.:
Prentice-Hall 1957) and Who Rules America Now? A View
for the '80s (Englewood Cliffs, N.J.: Prentice-Hall
1983)
16. Miliband, The State in Capitalist Society, p.5
17. See Miliband, The State in Capitalist Society and
Domhoff, Who Rules America?
18. Miliband, p. 47-48
19. Ibid., p. 72
20. Ibid., p. 78
21. Ibid., p. 80-81
22. See Nicos Poulantzas, Political Power and Social
Classes (London: New Left Books 1973) and Ronald
Chilcote's of critique of Poulantzas and structuralists
in Theories of Comparative Politics: The Search for
a Paradigm (Boulder, Co.: Westview Press 1981
23. Poulantzas, Political Power and Social Classes
24. Jessop, Bob, "Recent.Theories of the Capitalist
State," Cambridge Journal of Economics (December 1977)
25. Baran, Paul and Paul Sweezy, Monopoly Capital (New
York: Monthly Review Press 1966)
26. Chilcote, Comparative Politics, p. 370 and 373
27. Jessop, "Recent Theories of the Capitalist State,"
pp. 365-66
28. Off, Claus, "Advanced Capitalism and the Welfare
State," Politics and Society vol. II, no. 4 (1972)
29. Esping-Andersen, Gosta, Roger Friedland, Erik Olin
Wright, "Modes of Class Struggle and the Capitalist
State," Kapitalistate (no. 3-4 1976)
30. Ibid.
31. Warren, Bill, "Capitalist Planning and the State,"
New Left Review, Vol. 72 (1972)


32. Hamilton, Nora, The Limits of State Autonomy:
Post-Revolutionary Mexico (Princeton, New Jersey:
Princeton University Press 1982) p. 11
33. Evans, Peter and Dietrich Rueschmeyer, "The State
and Economic Transformation: Toward an Analysis of the
Conditions Underlying Effective Intervention,"is
Bringing the State Back In, Evans, Rueschmeyer, and
Theda Skocpol, eds. (Cambridge: Cambridge University
Press, 1985)
34. Duncan, "The Runaway Shop and the Mexican Border
Industrialization Program"
35. See Oscar Martinez, Border Boom Town: Ciudad
Juarez Since 1848 Austin and London: University of
Texas Press 1978) and Fernandez, The United States-
Mexico Border
36. Gibson, Lay James and Alfonso Corona Renteria,
eds.,The U.S. and Mexico: Borderland Development and
the National Economies (Boulder: Westview Press, 1985)
37. Ugalde, Antonio, "Regional Political Processes and
Mexican Politics on the Border" in Views Across the
Border edited by Stanley Ross (Albuquerque: University
of New Mexico Press, 1978)


CHAPTER II
DEPENDENT DEVELOPMENT AND THE MEXICAN STATE
This section on dependency theory and dependent
development analyzes the circumstances under which the
state in the dependent economy emerged. The unique
factors which shaped the Mexican state and continue to
influence its behavior are also discussed. Attention is
focused on the degree to which the Mexican state has
achieved and exercised relative autonomy and the nature
of that autonomy.
The issue of national interdependence is
certainly not new. Scholars often cite the controversy
over the Corn Laws of the eighteenth century as well as
Marx' dire warnings of the effects of imperialism in the
nineteenth century as evidence of early awareness of
interdependence among nations. Yet there is no question
that the concept of dependency with its emphasis upon
historical and structural analysis, disequilibrium, and
dynamic interaction fundamentally alters the traditional
picture of dependence.
In the years during and immediately following
World War II, many new nations, recently "decolonized",


25
appeared on the international scene. Defined as
"nation-states" on a theoretically equal footing with
all others, they had nevertheless been scarred by
varying histories of colonial penetration which the
industrialized countries generally had not experienced.
To the United States, recently ascended to the position
of global superpower, these new nations held out the
potential for new markets and resources for its
burgeoning manufacturers. The emergence of cold war
relations between the U.S. and the Soviet Union placed
these new nations in an even more critical position.
Little time was wasted during the early post-war
years in implementing an array of programs promoting
foreign investment and the transfer of technology
through bilateral and multilateral aid. The goal of
these programs was to facilitate the "development" of
emerging nations, to sustain the steady growth and
expansion of U.S. industry, and to stabilize the
international economic system. Unfortunately, the first
of these objectives has generally taken a back seat to
the needs of the second two. Recognition that the U.S.
and other "core countries" have retained the advantage
of control in these programs has been one of the major
underlying premises for the development of dependency
theory. After World War II, theorists and national
leaders of both core and periphery countries turned away


26
from the functionalist school of development modeled on
the development of advanced industrial countries, to
import substitution models. When these failed to yield
promised results in terms of "development", speculation
turned to basic models of dependency. The earliest
models were structurally vague, drawing largely from
Marxian concepts of capitalist-imperialist relations.
James Caporaso notes that English speaking theorists of
this period were necessarily hindered by their limited
access to significant Latin American works. The effect
was to exaggerate the external features of.development
and underdevelopment while neglecting complex internal
relations in the theory. More recent theories of
dependency have incorporated the micro-level internal
class issues with a macro-level study of international
capitalist penetration.'*' Such internal analyses are
especially important to understanding the development of
the Mexican state and the fluctuation of bargaining
power with respect to international capital.
From Diffusion to Dependency
In their work, Latin America: The Struggle with
Dependency and Beyond, Ronald Chilcote and Joel
Edelstein compare the premises of dependency theory with
those of the more traditional diffusion model of
O
development. Diffusion, they explain, holds that the
Latin American political economy is based on a feudal


27,
structure inherited from Spain and Portugal as a result
of the conquests. The liberal concepts of upward
mobility through thrift and hard work were antithetical
to this structure. The diffusionists attribute insta-
bility in Latin America to the expectations and
impatience of the people which rise faster than the pace
of development. Rather than permit the counterproduc-
tive overthrow of current governments, some
diffusionists support the existence of stabilizing,
modernizing military governments where stability is
especially threatened.
Development in the diffusion model is usually
assessed in terms of Gross National Product and
Q
"modernity". Modernity is generally equated with such
social and political characteristics as social mobility,
the complexity of social and political structure, the
existence of a middle class with access to investment
capital, urbanization, traditional liberal limits to
government power, and modern "pluralist" mechanisms for
compromise in the political sphere. Progress according
to this model necessitates the creation of surplus value
in these societies as well as the means for transporting
marketable goods. But because of the relatively non-
dynamic character of the feudal structure, diffusionists
argue, technology and investment capital must come from
external sources. Thus foreign penetration of capital


28
and technology, can enable the undeveloped Latin American
economies to produce their own surplus value. This
would then be reinvested in a manner, much like that of
European development in the seventeenth and eighteenth
centuries. As a result, the undeveloped area evolves
into a modern nation state.
Attention should be drawn here to an assumption
made by diffusionists about the state in less developed
countries. In general, the the nature of the state is
not a major concern for these theorists. Diffusionism
assumes that the state in these countries is very
simply, a rudimentary version of the ideal modern
capitalist state. That is, as the state in newly
decolonized countries begins to emerge, it should
generally develop a laissez-faire approach to eocnomic
activity along with a wide dispersion of political power
among the masses.
The post World War II era offered ample
opportunity to test the diffusion model. Historically,
Latin American dependence upon manufactured imports in
exchange for raw materials had made it highly vulnerable
to fluctuations in the world market. With the post-war
decline in trade relations between Latin America and
Europe, many Latin American countries experienced severe
shortages of goods and economic instability. The
establishment of the World Bank and the International


29
Monetary Fund at the 1944 conference at Bretton Woods
allowed credit and technical assistance to economies
which subscribed to IMF-guided stabilization plans.
Bilateral aid from the U.S. increased, reaching its peak
in the early 1960's under the Kennedy administration's
Agency for International Development and the Alliance
for Progress, an assistance program for development in
Latin America.
But evidence indicates that the pursuit of
national interests on the part of donor countries
generally took precedence in these programs. In their
research, Charles Frank and Mary Baird identify four
motivations for donor country participation in bilateral
and multilateral aid programs: 1) the achievement of
greater national security; 2) the fulfillment of
humanitarian goals; 3) access to markets on favorable
terms and to raw materials at favorable prices; and 4)
the diplomatic advantages of national power and
prestige.^ On the one hand, political leadership in the
U.S. argued that aid programs would lead to stable
democratic governments in the "Third World" which would
enhance international peace and cooperation. Yet argu-
ments based on cold war anti-communist rationale also
prevailed. Frank and Baird found economic aid from the
U.S. closely correlated with military alliances, while


30
technocratic criteria were observed only in part.
Further, humanitarian arguments were only subsidiary.
From the point of view of recipient countries,
Frank and Baird contend that actual economic gains
resulting from aid programs have been minimal. This
general claim has been borne out by various empirical
investigations by both liberal and conservative
scholars. Yasuoki Takagi found that poor countries with
small savings ratios were likely to have high capital-
labor ratios as a result of foreign aid which led to
initial expansion and later contraction. Official loans
resulted increasing debt service ratios and eventual
difficulties in servicing these debts. Peter Bauer and
Basil Yamey identify four effects of aid upon recipient
countries which suggest that aid adversely distorts
7
national economic growth patterns. In the first place,
rather than benefiting the private sector, aid has
enriched profiteering recipient governments who turn
control of foreign aid into patronage. These
governments, they contend, also have used aid relations
with donor countries to secure diplomatic and military
support for their troubled regimes.
Much research also suggests that increased
foreign investment which typically accompanies economic
aid to developing countries actually creates or
contributes to a process of underdevelopment. In this


31
view, underdevelopment is the progressive result of
profit repatriation, increasing debt service ratios,
shipping and license fees, and royalties which
collectively draw more wealth from the recipient
O
countries than they return.
Robert Wood sheds historical light on this
phenomenon. He explains that Latin American nations
inherited "overdeveloped" state structures in relation
to the national industrial sector during the colonial
period. Colonial education helped to reproduce that
structure by maintaining a middle echelon of civil
servants. The continuing underdevelopment of the entre-
preneurial class has thus made market-oriented programs
Q
of aid and investment problematic. To complicate
matters further, the few local entrepreneurs find few
opportunities to invest in the face of continual capital
inflows.^
The second effect has been the adoption of
unsuitable external prototypes for modernization such as
steel and petrochemical complexes and official airlines.
Bauer and Yamey warn that the western culture and values
that these prototypes impose on citizens of recipient
countries can lead to explosive retaliatory results.
Equally important, these prototypes bring increased
dependence upon world market conditions as opposed to
internal markets.


32
Third, researchers warn of the internal
instability -- domestic inflation, flight of capital and
general unrest induced by overvalued exchange rates
in the absence of increasing aid. Christopher Chase-
Dunn and Richard Rubinson, in their review of cross-
national empirical studies on the effects of foreign aid
and investment on economic growth and inequality found
that their short-term effect has been to increase the
rate of economic growth of recipient countries.
However, their long-term effect has been an actual
decrease in economic growth and an increase in income
inequality.^
Dependency Theory; Synthesis of Conflicting Models
These anomalies in the diffusionist conception
of aid constitute the basis of dependency theory.
Generally, dependency theory holds that foreign penetra-
tion rather than a force for development, has in fact
been a force for underdevelopment. It holds that
advanced industrial countries have never been
undeveloped in the sense that Latin American countries
are today. Analysis within this paradigm includes a
recognition of the unique history of 1) contacts between
what have been labeled "core" and "periphery" societies;
2) the distorting structural effects of external
penetration and dependence; and 3) the existence of
class relations in the context of a systematic model


33
which includes the industrial core. These relations
have definite implications, as we shall see, for the
development of the state in the dependent economy.
The doctrine of unequal exchange, a central
theme in the early development of dependency theory, was
largely derived through the empirical observation and
experimentation of Raul Prebisch. Prebisch first
perceived a hegemonic relationship between industrial
countries of the core and Latin American countries of
the periphery in the 1940's. He noticed that gold
tended to flow into the peripheral countries from the
center of the system during economic upswings and return
during the downswings. In the upswing, peripheral
economies enjoyed the creation of new money and exchange
credits brought about by increased foreign investments
and exports. During these times credit was available to
agriculture industries. But during the downswing,
credit contracted in the rural sector due to the
inelasticity of the supply of foodstuffs. Further con-
traction of the money supply resulted from the need to
pay for vital imports out of reserve capital. The
periods of greatest development, Prebisch noted, took
place in his native Argentina during the Great Depres-
sion when the country had to develop "inward" to compen-
sate for the loss of imports. As will be seen later in
this section, Mexico followed a similar pattern in the


34
Depression years. In both countries, the state took the
initiative in directing investment and facilitating
class formation in a dependent capitalist economy.
Prebisch also noted that the producers of
industrial products in the core had a clear economic
advantage over producers of primary agricultural goods
in the periphery. In the upswing, the industrial wages
rose more sharply than they fell during the downswing.
Prices for industrial goods remained stable during the
downswing, effectively preventing, in Prebisch's view,
the spread of technology to the periphery. Further,
because they were unable to organize on the same scale
as urban workers, agricultural workers were forced to
absorb a disproportionate share of the monetary
contraction. Finally, with few exceptions, peripheral
countries did not have the monopoly pricing ability over
agricultural goods which was endemic to the core with
regard to industrialized goods.
The flip side of this analysis was developed
around this same time by Hans Singer. Singer observed
the difference in income elasticities of the demand for
primary and industrial goods (the proportional demand
for industrial goods increases as income rises, while
that for agricultural goods decreases) and concluded
that core country income increased while agricultural
worker income decreased during upswings. Thus, in the


35
Prebisch-Singer synthesis, the developed countries have
the advantage on both sides of the economic equation.
The U.S., Prebisch observed, had unique tools
for coping with economic downswings. Its control over
monetary and fiscal authorities enabled it to pursue
policies of full employment without risk of monetary
instability. The monetary supply in peripheral
countries, however, could only be increased at the
expense of precious foreign exchange. Thus these
countries were more limited than center countries in
their options. First, they could maintain a strong
currency with high levels of imports and high unemploy-
ment, a policy which would benefit a segment of domestic
capital and state interests. Second, the peripheral
government could expand the money supply so as to
increase employment at the expense of ruinous inflation,
lowered imports and unrest among workers. Third, these
governments could maintain employment without devaluing
the currency, in which case reserves disappeared,
eroding the power the state and the national economy in
the long run. Each of these suggestions was intended
to bring about greater self sufficiency in peripheral
countries.
The withdrawal of international capital
provides the state with a number of options that it had not
previously had. Each of these options carried with it


36
the pressures which stem from favoring one sector of the
economy over another. Yet the very existence of options
implies that the withdrawal of international capital had
created a power vacuum. This vacuum was such that it
could only be filled by the state. Those governments
which were in a position to exercise greater autonomy
eventually chose from among Prebisch's three options to
favor the state-allied capitalist classes along with
their own interests. They did this by increasing
imports of capital and intermediate goods at the cost of
high unemployment. To have done otherwise would have
risked a serious erosion of state power during a
critical economic period.
Dependent Development: Industrialization In the
Periphery
Celso Furtado turned attention to the structural
deformation of the peripheral economy and the critical
effect on national employment which results from capital
penetration. In the dependent economy, capital
expansion is determined by external factors located in
the countries in the industrial center. Thus profits
generated by capitalists enterprises are not integrated
into the local economy but remain largely concentrated
in the center. '
In countries such as Furtado's native Brazil,
the abundance of land and labor eventually led to the


37
development of a national manufacturing sector. The
reinvestment in a single key industry (in the case of
Brazil, coffee) that these factors of production
allowed, brought about an expansion in the monetary
sector. This expansion was accompanied by a
corresponding increase in the demand for manufactured
goods. As wages were kept low, decreases in world
prices required little adjustment in wages keeping
demand for manufactured goods remained relatively
stable. Thus during periods of depression, national
manufacturers were able to turn inward to develop
markets for their goods. The result in Brazil was the
emergence of three largely unintegrated economic
sectors: the old declining subsistence economy, foreign
trade, and the new manufacturing sector based on the
development of domestic markets.^
The emerging industrial sector in peripheral
countries, however, has proven itself incapable of
absorbing surplus labor from the countryside where
economic policy has led to an increasing concentration
of land ownership. Furtado points out that increasing
productivity yields a constantly decreasing number of
jobs. This is because despite their ability to produce
capital goods, national industrialists remain dependent
upon technological innovations produced in the center.
These technologies are based on labor-saving strategies


38
designed to compensate capitalists in advanced
industrial countries for the tendency toward labor
scarcity and more favorable working class conditions
typical of these countries. Such technologies, however,
are obviously unsuited to underdeveloped countries where
the lingering subsistence economy continues to yield an
1 c
overabundance of labor. This labor surplus serves
the needs of capital well by assuring low wages and
elasticity of the labor supply.
Samir Amins analysis of development in the
periphery emphasizes dynamic interaction between the
forces of economic growth and underdevelopment. As
multinational capital expands in the periphery, local
elites are pulled into a transnational alliance with
"imperialist" economic interests. Thus rather than
eliminating the features of dependence, industrializa-
tion actually accentuates them. Amin also recognizes
the extra measure of autonomy allowed the state by a
dominant class which is typically divided and thus
weakened in the peripheral country.1
Several peripheral countries in Latin America
have experienced this pattern of industrialization. The
three most often associated with it are Mexico,
Argentina and Brazil, or the three "industrial poles" of
Latin America. Peter Evans has termed this pattern


39
"dependent development" and emphasizes its dynamic
aspects. Specifically, dependent development
... is a special instance of dependency, charac-
terized by the association or alliance of inter-
national and local capital. The state also joins
the alliance as an active partner, and the resulting
triple alliance is a fundamental factor in the emer-
gence of dependent development. '
Evans emphasizes that not all peripheral countries are
able to attain the phase of dependent development.
Those which do have the advantages of original ownership
of capital, potential domestic markets, and access to
raw materials.
In their monumental work, Dependencia y
Desarrollo en America Latina, 1969 (Dependency and
Development in Latin America), the Brazilians Fernando 1
Henrique Cardoso and Enzo Faletto describe the process
by which the state in these countries was able to adopt
a strategy of greater self-sufficiency and, in the
1 O
process, carve out a more autonomous role for itself.
The necessary capital for financing the development of a
manufacturing sector was obtained by the state from
taxes and duties from non-critical sectors. Calling
upon nationalist sentiments to gather support for its
program, the state proceeded to develop sources of
energy and raw materials wherever possible. It also
built roads for transportation of goods and raw
materials, and communications systems to facilitate
commerce. Further, it imposed import controls to


40.
increase imports of capital goods, fixed exchange rates,
actively reformed the monetary and banking systems to
facilitate increasing state investments, and established
central banks. The new industries were largely exempt
from taxation and the state took up the burden of
financing surpluses. In addition, the state maintained
its own enterprises, the profits of which were essential
to the reproduction and expansion of capital.^
During this period, the state was also
instrumental in the process of class formation. The
formation of a manufacturing sector in these economies
depended on an alliance of the state bureaucracies,
local capital and the internationalized sector including
finance and heavy industry. Only the state was capable
of undertaking the massive economic reorganization
required to forge and maintain this alliance.
Gaporaso points out that along with the greater
authority of the state to control the affairs of the
economy came, a shift in the balance of power away from
international capital toward local capital. The state,
as Caporaso also notes, was more than a mere inter-
mediary between two sources of capital. Through
actively regulating the distribution of foreign and
local capital, the state acquired an independent entre-
90
preneurial role. This was especially true in Brazil


41
and Argentina where the state was able to encourage
competition among foreign investors.
The policy of self-sufficiency required the
enhanced authority of the state and could only have been
possible during a period such as the Depression when
foreign capital withdrew from peripheral economies.
Furthermore, the success of such policies was only
possible in those parts of Latin America in which a
minimal amount of democracy could be achieved without
stirring up popular unrest which could threaten the
economic order. This was necessary in order to secure
the loyalty of private investors. Those areas of Latin
America, which were able to achieve some degree of
Self-sufficiency through the development of an
indigenous manufacturing sector, namely Mexico,
Argentina and Brazil,were blessed with two of the three
factors which Evans has identified as necessary to
dependent development. First, they all had large
heterogenous populations which held some potential for
the development of domestic markets. Second, they had
large land bases which provided great possibilities for
the exploitation of diverse natural resources. Two of
these three economies, Argentina arid Brazil, also had
original independent ownership of capital, the third of
Evans' three requirements for dependent development.
This third factor has not been present in Mexico's


42
economic development, at least not to the same extent as
it has been in the other two economies. Thus dependent
development has taken on a somewhat different character
in Mexico.
By contrast to these three countries, those
countries with much smaller populations and smaller land
bases, such as the Central American Republics, were more
likely to evolve into military dictatorships during the
Depression of the 1930's. These dictatorships included
increasing repression of political dissidents at home
and greater dependence on military aid from advanced
capitalist countries. In the cases of Brazil, Argentina
and Mexico, state autonomy did not only increase during
the Depression. The state was actually diversified,
acquiring for itself a broader national base especially
among those who benefited from its industrialization
policies.
The issue of "growth" without "development" has
important implications for the state and the success of
its strategies under conditions of dependent develop-
ment. In his comprehensive review, Caporaso aptly
describes how dependency theory arose in response to the
failure of traditional development theory to predict
which countries would or would not develop. This
crisis, he says, was deepened by growing dissatisfaction
with the mere notion of "growth" as a means of assessing


43
the success of "development" programs. In response,
dependency theory has shifted attention to issues of
distribution and equity as indicators of successful
91
development. By this standard, the development
strategies of Argentina, Brazil, and Mexico met with
only limited success. Although industrialization
allowed for the diversification of the state, large
majorities, mainly in the subordinate classes were still
denied its benefits. While a significant manufacturing
class developed, this class was associated with the
older agro-exporting sector in these economies. The few
consumers with the financial resources necessary to
purchase intermediate and capital goods could be found
oo
only in this older sector. As industrialization
progressed, the standard of living of the capitalist
class associated with the manufacturing sector improved.
The conditions of urban and rural workers, however,
worsened. Widespread displacement of peasants due to
industrial expansion was not offset by a corresponding
increase in industrial jobs. Furthermore, the processes
of attracting foreign investments and containing rampant
inflation which resulted from massive borrowing and
underdevelopment patterns, depended on the brutal
repression of labor by the state.
The class conflict which arose from the
increasing gap between rich and poor could only be


44
mediated by the state. With fewer pressures from
international capital, greater support from a growing
manufacturing sector, and the politics of self-
sufficiency and nationalism, the state, was able to
perpetuate its authority as a mediator during dependent
development.
As mentioned, the modern Mexican state has
developed in ways distinct from that of its two
neighbors to the south, Argentina and Brazil. In
Argentina, the government has been able to attract
potential investors from several foreign countries.
German and British investors were present in Argentina
well before World War II. Immediately after the War,
President Juan Peron had confidently invited a Russian
trade delegation to attend his inauguration fully
expecting to spur a response among American businessmen.
He was not disappointed.
Similarly, Brazil also benefited from
competition among investors. Throughout this century,
the Brazilian state has actively promoted diversifica-
tion of suppliers and markets for Brazilian goods. As in
Argentina, the Brazilian government especially
encouraged German competition for U.S. investors. Both
governments used the threat of nationalization, for
which there was tremendous popular support, to pressure
foreign investors into agreeing to joint ventures.


45
By comparison, the Mexican government had fewer
options. When foreign capital was being withdrawn from
Mexico, there were few possibilities for alternative
foreign investments on a large scale. Mexico's geo-
graphic' proximity to the U.S. has resulted in close ties
between the two countries and heavy pressure on Mexico
to limit the political and economic expansion of Germany
and other European powers on the North American
oq
continent.
.Other factors related to Mexico's proximity to
the U.S. also prevented the Mexican state from
developing greater flexibility in regulating foreign
investments. The nationalization of the oil industry
and other sectors of the economy in the 1930's, was made
possible by particularly strong anti-imperialist
currents within the Mexican working classes. Anti-
imperialism here was strong enough to threaten the
internal class structure, evidenced especially during
the Mexican Revolution. Perhaps anti-imperialism was as
strong as it was in Mexico because it was directed
against a particular aggressor U.S."capital. Anti-
imperialism in Argentina and Brazil, on the other hand,
has been more diffuse, owing perhaps to the multiplicity
of sources of foreign investments in those countries.
In any case, the Mexican state had no choice but to
coopt the workers' movement. By doing so, the state


46
increased its ability to resist the pressures of foreign
capital, at least in the short run.
Furthermore, unlike in Brazil and Argentina,
domestic capital was reluctant to engage in independent
entrepreneurialism. The expropriations seem to have
accounted for some of this effect.^ Also, Mexico was
suffering serious economic problems at the time, which
had their roots in the historic domination of the
economy by U.S. and other foreign capital particularly
in the financial, extractive and public service sectors.
These problems included a severe balance of payments
problems, high inflation rates, and a general lack of
O C
confidence in the peso. These problems, no doubt, had
an inhibiting effect on domestic capital.
These two factors, then the strength of anti-
imperialism and the weakness of domestic entrepreneur-
ialism in Mexico -- have forced the Mexican state to
harness the power of the worker's movement for its own
purposes. By contrast, the governments of Argentina and
Brazil have been able to ally with the more viable and
independent domestic capital in order to legitimize
their authority and increase their bargaining power in
relation to foreign capital. For the time being, at
least, they did not have to respond to the demands of
labor as the Mexican government did.


47
In order to harness the revolutionary spirit of
the working classes for its own ends, the Mexican state
had to coopt the leadership of the trade unions and
adopt the rhetoric of anti-imperialism. In the 1930's,
it consolidated formal political control by penetrating
deeply into all levels and aspects of Mexican society.
Working class support for the government as a legitimate
representative of working class interests was reinforced
by political rewards which were dispensed through the
complex organization of the state. The state's
inability to sustain its image as the legitimate repre-
sentative of the working class and to provide material
rewards to loyalists must result, then, in a decline in
its relative autonomy in terms of mediating class
conflict and setting the national economic agenda.
Many of these rewards go to members of the
state-allied capitalist class and centrally controlled
union and public officials in the form of patronage..
Patronage, in turn, depends on the steady flow of
revenues from state-owned enterprise into government
coffers. Mexico's long history of reliance on foreign
investment, however, has meant that development not been
self-sustaining.^ By the mid-1970's, the Mexican
government was forced to shift to a program of debt-led
growth in.order to sustain previous growth levels and
its ability to dispense political rewards. In the early


48
1980's, oil revenues were temporarily sufficient to
provide for these rewards as well as social programs and
other benefits for labor within the debt-led growth
model. Steven E. Sanderson describes the decline of
central authority during the Lopez Portillo years as
gradual and not immediately apparent:
In fact, the realization that the PRI (Institutional
Revolutionary Party) is in crisis has come largely
in the past two years. Oil patronage, and big-
budget programs in rural health, food self-
sufficiency, social security and jobs development
salved some of the mass constituency of the party,
at the same time creating a sense of national .
euphoria over the potential for development in an
oil-boom economy.
The long start-up time of opposition party organizations
also obscured the effects of the ruling party's decline.
With the end of the oil boom having finally arrived
during the current administration, however, stability is
more in question. Mexico now finds itself
. .in the anomalous position of having to pump
more oil faster in order to keep up with its debt
service obligations. The debt crisis and the
collapse of the oil boom have provoked radical
cutbacks in the federal budget, crippling social
programs, shutting down imports, and reducing
consumer power drastically. a
As oil revenues have declined, the inadequacies of the
debt-led program of economic growth have been revealed
and the traditional party structure which has dominated
Mexican politics has begun to disintegrate. Thus the
decline of state autonomy, if only temporary, is


49
reflected in the declining ability of the state to
dispense the rewards of political patronage.
More importantly for this study,, the state must
retain a certain amount of support within the working
class in order to maintain relative autonomy. In the
past it has accomplished this in two general ways.
First, it has adopted a strongly anti-imperialist stand.
This stand has been mostly rhetorical at home but has
led the Mexican government to provide real support for
revolutionary struggles in Central America and the
Caribbean from time to time. Second, it has provided
material rewards in the form of social programs and
support for the needs and demands of labor. This
support was especially strong in the 1930's although it
was coupled even then with severe repression of dissi-
dents within the labor movement who dared to stray too
far from the government's position.
Increasingly, in recent years, the state has
shown itself less and less able to provide for the
welfare of Mexican workers. Mexico is no longer self-
sufficient in food production and must rely on substan-
tial imports of food to meet its needs. Most of these
OQ
imports come from the U.S. Furthermore, the
government has been less and less able to fund social
programs. The effects of this diminishing capacity to
provide for common welfare is a decline in the popular


50
perception of the state as a vanguard of the revolution
and protector of the working classes. The Border Indus-
trialization Program not only illustrates the state's
declining ability to provide these services. It also
perpetuates the conditions which increase the demand for
these services and so perpetuates the state's inability
to meet social welfare needs.


51
NOTES
1. Caporaso, J.B., "Dependency Theory in Development
Studies," International Organization 34: 615 (Autumn
1980)
2. See Chilcote, Ronald and Joel Edelstein, Latin
America: The Struggle with Dependency and Beyond (New
York: John Wiley and Son, 1974) for a detailed
discussion of diffusionism and dependency.
3. Chilcote and Edelstein, p. 5
4. Frank, Charles R., Jr., and Mary Baird, "Foreign
Aid: Its Speckled Past and Future Prospects," Inter-
national Organization (Winter, 1975)
5. J.P. Grant quotes AID, "The major objects of the
U.S. foreign assistance program" were "to assist other
countries that seek to maintain their independence and
develop into self-supporting nations. The resulting
community of free nations, cooperating on matters of
mutual concern, offers the best long run prospect of
security and peace for the United States." American
Academy of Political and Social Science Annuals (March,
1979)
6. Takagi, Yasuoki, "Aid and Debt Problems in Less-
Developed Countries," Oxford Economic Papers (July 1981)
7. Bauer, Peter and Basil Yamey, "Foreign Aid: What
is at Stake?" Public Interest (Summer 1982)
8. For figures on profit repatriation and debt payment
see Severo Romero, "Modernization of Economic
Dependence," World Marxist Review (December 1979)
9. Wood, Robert E., "Foreign Aid and the Capitalist
State in Underdeveloped Countries," Politics and
Society (1980) 11
10. Chilcote and Edelstein, p. 26
11. Chase-Dunn, Christopher and Richard Rubinson,
"Cross National Evidence of the Effects of Foreign
Investment.and Aid on Economic Growth and Inequality: A
Survey Findings and Reanalysis," American Journal of
Sociology (November 1978)


52
12. .1 am indebted to Joseph Love for this general point
of view on Prebish's work on unequal exchange, "Raul
Prebisch and the Origins of the Doctrine of Unequal
Exchange," Latin American Research Review 15 no. 3
(1980)
13. Love discusses. Hans Singer in "Raul Prebisch and
the Origins of the Doctrine of Unequal Exchange," Latin
American Research Review, p. 58-59
14. Furtado, Celso, Development and Underdevelopment: A
Structural View of the Problems of Developed and Under-
developed Economies (Berkeley and Los Angeles:
University of California Press, 1964)
15. Furtado, Celso, Obstacles to Development in Latin
America (New York: Anchor Books, 1970)
16. Amin, Samir, Unequal Development: An Essay on
the Social Formations of Peripheral Capitalism (New
York: Monthly Review Press, 1976)
17. Evans, Peter, Dependent Development: The
Alliance of Multinational, State, and Local Capital
in Brazil (Princeton University Press, 1979) p.31-32
18. For reviews of Dependencia y Desarrollo en
America Latina, see Jackson, Russett, Snidal and Sylvan,
"An Assessment of Empirical Research on Dependencia,"
Latin American Research Review 14 no. 3, 7-28 (1979);
Caporaso, "Dependency Theory in Development Studies,"
and Christopher Chase-Dunn, "A World System Perpsective
on Dependency and Development in Latin America," Latin
American Research Review, 17 no. 1 (1982)
19. Galeano, Eduardo, Open Veins of Latin America: Five
Centuries of the Pillage of a Continent (New York and
London: Monthly Review Press, 1973) p. 230
20. Caporaso, "Dependency Theory in Development
Studies," p. 605-28
21. Ibid.
22. For an in-depth analysis of the commercial nature
of the agrarian economy in colonial and neo-colonial
Latin America see Andre Gunder Frank, Capitalism and
Underdevelopment in Latin America (New York, New York,
1969)


53
23. Hamilton, Nora, The Limits of State Autonomy: Post
Revolutionary Mexico (Princeton New Jersey: Princeton
University Press, 1982
24. Reynold, Clark, The Mexican Economy: Twentieth-
Century Structure and Growth (New Haven and London:
Yale University Press, 1970) p. 208
25. Ibid.
26. Henry Schmidt points out the "economic miracle1' of
the post-war period ran aground due to the concentration
of rewards, insufficient investments, insufficient
regional development and insufficient technology trans-
fers in "The Mexican Foreign Debt and the Sexennial
Transition From Lopez Portillo to De la Madrid,"
Mexican Studies, 1:2 (Summer 1985)
27. Sanderson, Steven E., "Political Tensions in the
Mexican Party System," Current History 82: 405
(December 1983)
28. Ibid.
29. Ibid., p. 436


CHAPTER III
HISTORY OF BORDERLAND DEVELOPMENT
Maintaining control over the northernmost terri-
tory of Mexico has been a problem for the Mexican gov-
ernment since the time of Independence. Even before
that, exploration, trade and settlement in the name of
other great powers, particularly Russia and Great
Britain, had posed a continual challenge to Spanish
authority over much of the northwestern region. In
order to maintain the region's dependence upon Spain,
Spanish authorities restricted trapping throughout much
of it.^ Like much of Mexico the region was char-
acterized by a high concentration of wealth, a rigid
class structure, and the absence of agricultural tech-
nology and a socially productive labor force, all
factors which made for an stagnant economy. In addition
the remoteness of the northern area and the sparseness
of settlements in what is now Arizona and New Mexico
made it a difficult area to defend against the en-
croachments of other nations and the retaliatory raids
o
of displaced Indians.


55
United States industrial and commercial expan-
sion which was under way before the time of Indepen-
dence, had profound effects on the Mexican economy. By
the early nineteenth.century merchants and traders from
U.S. Territory had ventured into the southwest area via
the California coast and the Santa Fe Trail running from
California to St. Louis. Mexico, at that time, included
what is California, Nevada, Utah, Arizona, New Mexico,
Texas, and much of Colorado today. Expanding indus-
trialization and commerce with Asia and other parts of
the world brought independent entrepreneurs, as well, as
trappers and traders. Cattle ranchers expanded into the
Southwest with the development of manufacturing, food
processing and transportation in New England. Finally,
cyclical depressions brought waves of migrants to the
q
southwest in search of cheap farm land. Economic ties
between northern New Mexico and interior Mexico began to
weaken with these developments after 1800.^ For two
hundred years, Spanish and Mexican settlers had observed
the traditional Spanish American system based on hier-
archical social relations and use-value. U.S. expansion
brought with it the competing Anglo American system
5
based on contract law and commercial exchange value.
After Independence in 1821 trading and trapping
areas such as Santa Fe and Taos developed rapidly.
Trade between Missouri, California, New Mexico and


56
Chihuahua just south of New Mexico flourished. American
traders wanting to take advantage of the lucrative
opportunities for acquiring pelts in Mexico often con-
ducted smuggling operations to get them back into the
U.S. When Mexico attempted to restrict this activity in
1824, many American traders acquired Mexican citizenship
and bought land in Mexico in order to continue trapping
expeditions.
Along with the continual encroachment of
American traders onto Mexican lands, Mexico faced other
problems in trying to maintain its control over the
northern territory. In California, the Mission system
was deteriorating as mission lands passed into the
secular Anglo American landholding system. Frequent
revolts against government officials took place in Texas
and California between 1824 and 1835. Many of these
revolts were led by Anglo settlers who were' not bene-
7
fiting under the conservative central government.
President Antonio Lopez de Santa Anna further
antagonized regional leadership, when he reduced the
size of state militias in remote regions such as the
O
north and the Yucatan. In addition, Indian raids
against Mexican settlers weakened the regional militias.
American traders encouraged these raids, providing
markets for the stolen Mexican goods. In return, the


57
Indians received whiskey, arms, munitions and other
Q
goods from the Americans.
Two other factors contributed to the inability
of the Mexican government to strengthen the northern
frontier against the expansion of American capital.
Invasions by the Spanish and the French occupied the
military between 1823 and 1861. Second, massive Mayan
uprisings in the Yucatan and general uprisings in
central Mexico and Veracruz had to be quelled. The
combination of repeated foreign invasions and widespread
domestic rebellion were all that the central government
could handle. While the Spanish and French were
repelled and domestic rebellion kept under control, the
northern territory, what is today the U.S. Southwest,
slipped away.
The loss of the north might have been prevented
if the government had been able to stimulate migration
to this region. Much of this area, however, was arid
and unsettled, and therefore unattractive to migrants.
Furthermore, some local officials appear to have been
reluctant to bring in new settlers fearing threats to
their political power base.1 Also, it seems doubtful
whether the Mexican government actually wanted to stimu-
late massive migrations from the interior, its base of
control, to remote areas which were the constant site of
rebellion. Finally, as David Weber has pointed out,


58
Mexico was not experiencing the massive displacement
brought about by industrialization which was bringing
1 1
waves of American settlers to the western frontier.
Industrialization in the north eastern U.S. had brought
about a dramatic decline in the small farm and a sharp
rise in the rate of unemployment among the poorest
sectors of the population.
Robert Rosenbaum raises the important issue of
nationalism both in the northern area and in the
interior. He questions whether Mexico had actually
developed a sense of itself as a nation by the time of
the Mexican-American War. This question has important
implications for borderland development in later years
and will be addressed in Chapter Four.
The invasion of Mexico by U.S. troops in 1846
was justified by President James Polk as a response to
Mexico's unpaid debt to American citizens who had lost
property during and after the Wars of Independence. The
Mexican-American War which followed enabled U.S. forces
to push further into the resource rich lands and toward
the commercial ports of the west. The war officially
ended with the signing of the Treaty of Guadalupe
Hidalgo in 1848. This treaty established the U.S.-
Mexican border along the Rio Grande from the Gulf of
Mexico to El Paso. From there it divided the two
countries westward along the borders of the states of


59
New Mexico and Chihuahua, and along the Gila River to
the Colorado River. The southernmost portion of Arizona
did not become part of the U.S. until the 1853 Gadsden
Purchase which enabled U.S. interests to build a rail-
road to the Pacific. The treaty also confirmed United
States acquisition of Texas which had seceded from
Mexico in 1835-36 and had been annexed by the U.S. in
1845. With the combined loss of Texas and the
northwest, Mexico was deprived of about'half of its
territory.
Trade across the newly established border
declined in the years immediately after the war. The
French occupation in Mexico and the American Civil War
contributed to this decline. The lure of profitable
trade opportunities in newly opened California markets
also enticed many American merchants away from trade
with Mexico. In addition, the Mexican government had
imposed high federal duties on imports of foreign goods
through the enactment of tariffs in 1845 and 1853.
Further impediments to trade were caused by corrupt
customs officials and high state and local taxes on
IQ
business property.
These tariffs and taxes served to protect
fledgling Mexican industries from foreign competition
and enhance the central Mexican government structure.
They were problematic, however, for the economies of the


60
border states which were remote from Mexico's centers of
production. High duties resulted in Mexican border
crossings to.the U.S. either to buy goods or relocate
permanently. This trend along with high business taxes
severely inhibited the development of Mexican industry
and commerce in the border states.^
Immediately after the Mexican-American war, the
Mexican government had wanted a vast desert in the north
to separate central Mexico from U.S. territory and dis-
courage further invasion. Yet, its-concern about
depopulation of the northern states led it to take
measures to stem border crossings. In 1849 it allowed
certain staples to be obtained at lowered duties at
northeastern ports. The benefits of this measure were
lost, however, when the U.S. government approved new
trade routes which permitted transportation of foreign
bonded goods to Mexico and increased the amount of time
during which exports could be stored at Texas ports.'1'
The emerging trade war between the U.S. and the
Mexican border led to filibustering raids on Mexican
settlements across the border by disgruntled American
business men and Mexican sympathizers. In response to
these raids, Mexican border officials pressured the
central government to lessen restrictions on trade in
the northern states even further. .The government
responded in 1858 when it permitted customs houses in


61
Tamaulipas to import free of duties and federal taxes,
and pay only nominal state and local taxes. It also
allowed in-bond warehouses for foreign goods in border
to
towns. Raul Fernandez attributes this shift in policy
by the central government to its desire to strengthen
border settlements, end- the flight of Mexican citizens
to the U.S., and prevent the smuggling of cheap American
1 Q
goods which were ruining Mexican industry. The zone
which was established by these measures became known as
91
the Free Zone.
Within a year the Free Zone was extended to the
state of Chihuahua. Political in-fighting in the
Chihuahua state government, however, resulted in its
termination there in 1860. From then until the end of
the century, the Zone was debated in Chihuahua and from
time to time put into effect. Within a few more years
the Zone was extended to include the states of Sonora,
90
Coahuila and Baja California. ^
As a result of the Free Zone, trade along the
Mexican side of the border prospered and American busi-
nesses stagnated. Mexican goods were smuggled into the
U.S. against the protests of American businessmen. As a
result, the U.S. government put political and military
pressure on the Mexican government to terminate the Free
Zone. Frequent military raids by the U.S. disrupted
economic life and frightened border settlers during this


62
period. In addition the government was experiencing
internal pressures due to the decline in government
revenues caused by the Free Zone. In spite of this
adversity, however, the government refused to terminate
the Zone.
In 1876, the Revolution of Tuxtepec in which the
border state of Tamaulipas played a major role, brought
Porfirig Diaz to power. Diaz was a strong supporter of
the Free Zone and this support assured its continuation
for the foreseeable future. Diaz sought to ease ten-
sions with the U.S., however, by openly inviting U.S.
investors into Mexico. Under Diaz, traditional agricul-
tural economy was converted to commercial enterprise
through massive expropriation and the merging of land
based capitalism with the commercial finance sector.
The government allotted over two million acres of com-
munal land to land companies and estate owners. It also
confiscated privately owned lands leaving the burden of
OO
proof of ownership with the occupant. State power
became more centralized through the development of
infrastructure and production was accelerated with the
assistance of massive foreign investments. The
government was stabilized, but as a result of these
investments, Mexico lost considerable control over major
sectors of the economy.


63
Under Diaz, the economies of the Federal
District and the northern area benefited most. In the
north, U.S. and other foreign interests invested in
mining, cattle, agriculture, commerce, small industry,
and railroads. In addition, U.S. markets were made
available for Mexican goods from these areas.
Nora Hamilton discusses how the development of
the forces of production in the periphery enables the
peripheral state to gain greater bargaining power in
relation to the core.^ As the dependent state depends
less on the import of manufactured goods and more on
imports of capital goods and technology, a national
manufacturing class develops. In turn, the interests of
domestic capital strengthen the bargaining power of the
state in relation to foreign capital. This bargaining
power remains, however, within the framework of
promoting capital accumulation for the benefit of
domestic capital and the foreign investment upon which
it relies. Both the domestic and international aspects
of the dominant class were temporarily..subordinated to
the state during the Porfiriato (the thirty year period
of Diaz' presidency). Segments of the dominant class in
Mexico which included older inefficient land holding
forms, was forced to undergo the upheavals of expropria-
tion and centralization of authority. Segments of
foreign capital were forced to endure the troublesome


64
Free Zone. To their benefit, however, Mexican capital
was able to enter into an alliance with powerful foreign
capital and foreign investors were able to expand into
Mexico.
The ultimate loss of control over key sectors of
the Mexican economy, however, indicates that this influx
of foreign investment was problematic in the long run
for the Mexican state. As Hamilton points out, the
relation between the peripheral state and foreign
capital continues to be one of dependence as unequal
exchange relations of the colonial period give way to
the profit repatriation, interest payments and loan
amortization which characterize the post-colonial period
of increasing foreign investments.
By the 1870's, American business on-the U.S.
side of the- border, had begun to regain competitiveness.
Improvements in transportation and communications had
enabled businesses to lower their prices significantly.
Furthermore, while much of the border region had thrived
commercially under the auspices of the Free Zone and the
Diaz government, its manufacturing sector had
experienced only limited growth. Borderland commerce
based on imports had actually resulted in the
strengthening of the archaic land owning structure.
Industrial development languished in the shadow of the
agro-cOmmercial sector. Fernandez views this phenomenon


65
as part of a historic pattern of development.
Neither commerce nor commercial capital should be
confused with capitalism as a mode of production, since
both commerce and commercial capital are much older than
capitalism. The presence and development of commerce is
an insufficient explanation of the transition from one
mode of production to another. In fact . .It is fair
to say that the development of merchant wealth has
generally stood in inverse proportion to the general
economic development of society. The story of Latin
America is one large textbook example of this seeming
oc:
paradox.
Furthermore, commercial development alone is
inherently unstable. Oscar Martinez describes the com-
mercial development of Ciudad Juarez as
but an artificial and temporary thrust . Juarez
succeeded temporarily in overcoming isolation and
lack of capital and resources by seeking and
obtaining import concessions. While the Free Zone
existed, the Mexican frontier town surpassed El Paso
commercially. The gradual reduction and. final
abolition of the controversial privilege, combined
with the water shortage and depreciation of the
national currency . led to the collapse of the
Juarez.economy . most businessmen were out-
siders, many foreigners, who had come to the fron-
tier in an attempt to take advantage of favorable
circumstances, and who left when conditions were no
longer profitable. .
The Mexican government decree further restricted
the development of manufacturing along the border by
raising import duties in 1891. Trade between the border
area and the interior was also restricted due to


66
complaints by interior merchants of smuggling from the
27
border. This measure essentially cut the border
region off from the interior. Its previous economy
based on agriculture had been largely replaced by a
commercial one which depended on the interior for
markets. Throughout the 1890's, the Free Zone was a
bone of contention for U.S. interests, border merchants,
and the Mexican government. While border merchants
continued to pressure the government for fewer
restrictions, the U.S. government retaliated with its
own measures such as the restrictions of in-bond goods
through the U.S. to the Mexican Free Zone. In the
meantime the Diaz government alternately extended the
Zone in retaliation for U.S. measures, and restricted it
OO
to protect interior merchants. In 1905, the Free Zone
was finally abolished. U.S. political and economic
pressure had caught up with the Mexican government and
interior industrialists had convinced it that to favor
one area would be unwise.
In addition to this sort of political
instability, border cities have also been plagued by
problems of overpopulation. Population growth along the
border began to take place soon after the border was
established. It was originally stimulated by the rapid
expansion of U.S. commerce, railroads, and agriculture.
Because land was readily available to American settlers


67
in Texas and much of the area further west was arid and
unattractive, labor here was scarce. Growing industries
turned to the Far East for a supply of cheap labor. At
first they depended mainly on Chinese labor until
Chinese immigrants were prohibited from immigrating by
an exclusion act in 1884. Japanese workers were hired
until World War I when they met the same fate. After
the war, industry relied on Indian and Filipino labor.
It wasn't until the mid-1920's that Mexican workers
became the chief pool of labor for industry and agricul-
ture in the western U.S. .
Mexicans began to migrate northward once the
border was established. Their numbers increased in the
last quarter of the nineteenth century when jobs became
widely available and railroads were built which could
transport large numbers of workers to the north. This
trend was complemented by the process of "depeasant-
ization" taking place in the Mexican countryside during
the Porfiriato.^
When Mexican workers were repatriated, they were
usually taken as far as the border. This procedure
posed great problems for border towns as many workers
remained there hoping to re-enter the U.S. to work. The
pressure that the north-south migrant traffic placed on
city services was often unmanageable. The central
Mexican government responded by making a few efforts to


68
relieve congestion. In 1907 and again in 1910 the
central government in conjunction with state governments
offered to put returning workers to work on railroads
qi
and in the mines of Chihuahua.
Most migrants were intent on working in the
U.S., however. As a reserve pool of labor for U.S.
employers, migrants kept wages down in the U.S. Thus
crowding on the Mexican side of the border served the
interests of U.S. capital well.
The problems of crowding and the absence of an
economic base in border cities which is independent of
the U.S. economy have posed great challenges to all
levels of the Mexican government. The government's
concern stems from its fear of unrest at the border and
the possibility of again losing northern territory to
the U.S. correcting the problem were limited. On one
hand, the government often neglected the northern
region, sometimes allowing contraband activity with its
limited benefits. On the other hand, it actively pro-
moted free trade by establishing the Free Zone in
response to pressures from state and local governments.
Neither of the options did more than permit the border
region to continue, in one form or another, its economic
dependence on the U.S* economy.
It is significant, however, that during this
period, the Mexican state saw itself and the interests


69
of the nation as distinct from those of the U.S. For
many years the Porfirian government resisted political
and military pressures from the U.S. to eliminate the
Free Zone. The awareness and ability to resist the
advances of U.S. capital along the border indicate a
relatively high degree of autonomous power on the part
of the Mexican state in regard to international capital.
With massive expropriations of peasant and Indian land,
widespread migration and unrelieved crowding at the
border, we can assume that the government did not make
the needs of labor a priority. Thus the question of the
State's legitimacy in regard to labor does not seem to
be a relevant issue during this period.
A truly nationalist state with the advantages of
genuine sovereignty would attempt to integrate the
northern region into the rest of the country to reduce
the vulnerability of both the region and the entire
country to external forces. This would require the
development of an economic base largely independent of
the U.S. economy with linkages to the interior. It
would also require the development of labor-intensive
industry appropriate to the needs of workers and
adequate support for social services in the northern
region.
The Mexican economy during the Porfiriato, of
course, was not independent of the U.S. economy, and the


70
state was structurally limited to but a few options for
relieving border problems. Centralization of authority
was a foremost priority for without it, Mexico was
vulnerable to the invasions of powerful foreign nations.
Thus the needs of various regions had to be subordinated
to the process of centralization.
The elimination of the Free Zone in 1905
severely affected the borderland economy. Many Mexicans
migrated to the northern side in order to find work
on
after it ended. In desperation, border towns turned
to tourism, fostering especially those activities which
were legally restricted or unavailable in the U.S.
bullfights, cockfights, boxing, gambling, prostitution,
liquor sales and opium refining. Yet the process of
depopulation and decommercialization continued.
With the onset of the Revolutionary wars in
Mexico in 1910, the border areas became increasingly
congested with refugees displaced from the countryside.
While the U.S. government welcomed those political
refugees and exiled revolutionaries who were sympathetic
to U.S. interests, it was more selective in regard to
others seeking entry.
With the entry of the U.S. into World War I,
jobs were made available to Mexican workers. Migrants
flocked to the border hoping to cross. Again, the U.S.
government could afford to be selective and migrants


71
were screened for health and literacy and were taxed
OO
eight dollars a head. On the Mexican side, the pro-
blems of unemployment and inadequate social services
grew worse as the war caused disruption in cross border
trade.
During the Revolutionary period,, businessmen,
local officials and journalists in border towns called
for the reestablishment of the Free Zone and the nation-
alization of public utilities. Businessmen now framed
their arguments for the Free Zone in revolutionary
terms, claiming it would be a means of releasing the
region from the grip of U.S. capital. The call for
nationalization of public utilities also reflected an
increasing awareness on the part of border residents of
their subordination to the U.S. economy, their status as
citizens of Mexico and their need for a powerful
advocate at the national level. Clearly, anti-
imperialist consciousness had reached the border.
Such pressures from the border and elsewhere
were internalized by the state during this period of
Revolution. As a result, the Constitution of 1917
formally eliminated the privileges of foreign capital
and national political elites and provided for national
control of Mexican resources. It also expanded the
formal rights and protections of workers.^ The
government's self-stated role was now to safeguard the


72
workers through an extended period of capitalist
development culminating in socialism. As the self-
proclaimed vanguard of the revolution, the state
acquired a legitimacy which actually enabled it to
control labor throughout Mexico to the benefit of
domestic and foreign investors.
Thus American business interests along the
border suffered little as a result of the revolutionary
restructuring of the state. U.S. capital, in fact,
played an influential part in the revolutionary process
by pressuring for the easing of official embargoes of
food and military supplies to forces favoring U.S.
capital. In response to these pressures, President
Woodrow Wilson advanced military aid and credit in 1914
to the Constitutionalist forces of Venustiano Carranza
and Alvaro Abregon who were based in the north. These
forces were fighting the pro-British General Victoriano
de la Huerta who had taken power the year before.
Likewise, the U.S. government withdrew material support
for the forces of Francisco Villa and Emiliano Zapata
when it became clear that the policies of these
revolutionary leaders would adversely affect U.S.
property owners.
The U.S; government and private interests
assisted the Constitutionalists in other ways as well.
U.S. oil businessman Edward Doheny provided them with a


73
million dollars in credit and military aid and refused
to pay taxes to the de la Huerta government. U.S.
border towns assisted in shaping the course of the
Revolution in favor of U.S. interests by giving refuge
to Mexican revolutionaries who were sympathetic to those
OO
interests.
U.S. military intervention was especially
critical in guiding the Revolution towards a favorable
outcome for U.S. interests. In 1916 a military invasion
led by U.S. General John Pershing dealt a serious blow
to Villa's forces. The final blow to de la Huerta came
when the U.S. government landed marines at Veracruz
under the pretext of preventing a German munitions ship
from landing at the port. During the international
conference which met in Niagara Falls to mediate the
conflict, President Wilson threatened the force of Con-
stitutionalist and U.S. troops if negotiators failed to
on
arrive at a "pro-democracy solution."0^
Once in power, the Constitutionalists deliber-
ately prevented an alliance from forming between urban
workers and peasant revolutionaries. The Constitution-
alists feared that such an alliance would have brought
about a more radical transformation of the state in the
interests of these subordinate classes and against those
of the Constitutionalists.^


74
The reluctance of the Mexican government to
actually nationalize American interests in Mexico in the
years immediately following the Revolution had much to
do with its recognition of the capacity of powerful
interests in the U.S. to retaliate. The deployment of
U.S. ships off the coast of Mexico in 1921 when the
nationalization of oil firms was under consideration was
a poignant reminder of this capacity. Thus U.S.
government and private interest affected the outcome of
the revolution by establishing the limits within which
the Mexican government could maneuver. Those limits
were the continuation of capital accumulation by U.S.
interests in Mexico.
The Mexican state, then, was pressed between the
interests of U.S. capital and the increasingly nation-
alistic demands of Mexican commerce, industry, peasants
and urban workers. While the government made an open
declaration of its commitment to subordinate classes and
the national economy, it did not expropriate American
owned properties until later in the 1930's. Instead it
concerned itself with further centralizing its authority
and protecting interior merchants.
Thus in the 1920's with the first World War over,
American based commerce thrived and expanded in the
northern region. It was assisted by the establishment of
the U.S. dominated International Bankers Committee, the


75
linking of the peso to the dollar and the close relation-
ship between the Banco de Mexico and the U.S. Federal
Reserve Bank. By 1926 individuals with English surnames
owned 40% of the total value of the physical structures
in Ciudad Juarez and fourteen Americans operated most of
the establishments in Tijuana. Banks, stores,
distilleries and factories flourished along the border
largely financed with U.S. capital.^
Yet while border towns boomed, their residents
faired poorly. Most of the employees in U.S. owned
businesses were American and much of the newly created
economic activity served the needs of American tourists.
In addition, much of the tax revenue from these
establishments accrued to the state and federal
governments. Some city governments were able to build
hospitals, parks, museums and other public services and
attractions, however, with leftover revenues.
Private interests on the Mexican side were not
pleased with the dominant position of American capital
and called for the reinstatement of the Free Zone. They
feared that they border areas were becoming far too
dependent on the U.S. economy. Many Mexican consumers
were traveling to the American side to buy basic goods.
This contributed to Mexico's unfavorable balance of pay-
ments and the decline of Mexican owned businesses. They
argued that under a reestablished Free Zone, tourist


76
money would remain in Mexico and Mexican owned business
and commerce would grow. This, in turn, would produce
the multiplier effects of increase of national
production and expanded local markets.43
Many also objected to the border area's
increasing image as a collection of "fallen cities"
given over to the sins of prostitution, gambling, liquor
and other forbidden activities. These objections came
from city officials and other residents of border towns,
Mexican states in the interior and reformers on the U.S.
side.43
The Mexican government did little in the 1920's
and early 1930's to respond to these complaints,
however. It rejected the idea of reinstating the Free
Zone on the grounds that it would cause unfair
competition for interior merchants and national
disunity, declining federal revenues due to the
increased costs of customs regulations, possible
retaliatory action by the U.S. and unacceptable
dependence of the border upon the U.S. economy which
could well lead to its absorption by the U.S.44
The first of the these concerns, unfair competi-
tion for interior merchants, national disunity and
declining government revenues indicate the Mexican
government's concern with the strength of the central
government and the loyalty it received from interests in


77
the interior as opposed to those in the northern region.
The concern with the possible loss of the border region
shows how aware the state was of the important of the
border. The border was a bulwark against the pressure
of U.S. capital and the erosion of the state's own power
in the north. The state's efforts to settle the border
of Baja California were further evidence of its desire
to prevent further expansion of U.S. interests into
northern Mexico during this period.
Although the state clearly had an interest in
preserving this boundary, it was unable to offer border
residents any means of economic and social integration
into the rest of Mexico. Border settlements were forced
to continue their unofficial reliance on the U.S.
economy. Migration to the border continued throughout
the 1920's although it declined somewhat due to the
reforms of the post-revolutionary government which put
more land into the hands of the peasants. The
region's dependence on entertainment particularly during
the era of prohibition continued. Heavy spending by
Mexican consumers on the U.S. side and the steady influx
of U.S. capital into the border region also continued.
Thus in the long run, the government's policy of neglect
of the border did little more to hold back the pressures
of U.S. capital than its support for the Free Zone would
have done.


78
The Great Depression of the 1930's brought hard
times to the border region as it did to much of the rest
of the world. Some cities such as Ciudad Juarez
continued to survive through the entertainment industry
until prohibition ended in 1933. In general tourism
declined, however. In addition, Mexican laborers in the
U.S. were being repatriated to the border area so as to
save scarce jobs and benefits for permanent U.S.
citizens. The slowing rate of investment in Mexico
added to the hardship of returning nationals. D
Under the administration of President Lazaro
Cardenas, which lasted from 1933 to 1939, the Mexican
economy underwent major centralizing and nationalizing
transformation. The state consolidated control over
national resources, utilities, communications, transpor-
tation, banks and manufacturing investment. In 1938,
the government nationalized British and U.S. oil com-
panies in response to growing anti-imperialist threats
from both the left and right in Mexico. By calling up
its role as revolutionary vanguard, the state was able
to rally nationalist and anti-imperialist sentiments
around these reforms.
The border area benefited under the new
nationalism of the Cardenas period. The government's
call to "buy Mexican" coupled with the devaluation of
the peso in the 1930's stemmed the steady flow of


79
Mexican consumer traffic to the U.S. and actually stimu-
lated native commerce and industry. In addition,
Cardenas permitted the reinstatement of the Free Zone in
Tijuana in 1933 and two port cities in Quintana Roo in
1934. Later in 1937, the government included all of
Baja California Norte in the Free Zone. Two years later
the Rio Colorado Valley in Sonora and two more ports in
Quintana Roo were.added to the Zone.
Returning workers along the border also
benefited from the reforms of the Cardenas period. Many
were helped by the improvements in urban working
conditions and government sponsored programs. In
addition, the government established colonies in the
newly nationalized oil fields to be worked by returning
migrants. The success of these colonies was limited,
however, due to the lack of capital necessary for
maintaining them. As many of these oil field were
located in the south and along the Gulf Coast it seems
logical to assume that the state's commitment to labor
extended to the geographic as well as social
reintegration of the returning workers into Mexican
society. The government also worked to eliminate the
seamier aspects of the entertainment industry along the
border in the interest of national pride.
The Mexican state experienced its greatest
amount of autonomous power during the Cardenas years.


80
The nationalization of U.S. and British owned property
particularly in 1938 was a clear indication of its
ability to act in opposition to the immediate interests
of foreign owned capital. Domestic capital also
resented the nationalist policies of the state. Both
domestic and international capitalists angrily resisted
the strong support and encouragement which the
/O
government provided for union activity.
On the other hand, the government also remained
one step ahead of the workers' and peasants' movements.
By facilitating strike action and workers' marches, the
government was able to foster union dependence on it and
thereby incorporate these movements into its very
structure. Having done so, the government divided the
work force into separate units for urban workers and
peasants. This separation effectively prevented these
two groups from joining forces and ultimately imposing
their common demands on the government. The
government's control over the subordinated classes was
evidenced by its willingness to crush any independent
organizing effort which might threaten its long term
development plans. These plans remained always within
49
the framework of capital accumulation.
Therefore, although there was considerable
antagonism between capitalists and the state in Mexico,
the capitalist class -- a mixture of agricultural, manu-


81
facturing, and commercial interests -- benefited during
the Cardenas period. From 1934 to 1940 the Gross
National Product increased by more than 30%. Manufac-
turing output increased by 42% and banking and insurance
profits remained around 20% throughout this period. At
the same time, unemployment and underemployment were on.
c50
the rise. A significant part of the increasing
impoverishment was probably borne by returning Mexican
nationals as well as Indians whose communal lands were
broken up by the state.
It is significant that the state was able to
achieve such a substantial degree of autonomous power
during the Great Depression when U.S. capital was
withdrawing from Mexico. The ability, of the Mexican
state to maneuver is directly affected by the
expansionary pressure of U.S. capital. Only when U.S.
capital began to withdraw, was the state able to fulfill
any of the nationalist goals of the Revolution. Yet
U.S. pressure did not cease to be a threat during the
Depression. Accordingly, the conditions of capital
accumulation continued to provide the framework for the
state's maneuverability.
The period which followed, from 1940 to 1960,
has often been referred to as the period of the
"economic miracle" in Mexico. This was a period of
relative stability and prosperity, increased


82
urbanization and concentration of wealth. The Mexican
government was able to attract and maintain high levels
of U.S. investment by imposing high tariff walls around
domestic markets. Thus a high growth rate was
maintained along with a high level of dependence of
Mexican capitalism on U.S. investment especially in
industry, finance, agriculture/ and utilities. This
high investment and growth rate, in turn, could only be
maintained with increased repression of the labor force
and declining real wages.
During this time, the government actively sought
out loans with which to finance import substitution. It
met with resistance, however, from both foreign and
national capitalists due to its nationalization
policies. As a result, the government financed the
import substitution through deficit spending which
resulted in massive inflation. In response to pressures
by foreign capital it was forced to devalue the currency
C*1
at the end of the decade. Resisting these pressures
would have jeopardized revenues obtained from the
foreign controlled export sector which was essential to
the country's balance of payments. Similarly, the
state's attempts to enforce Constitutional provisions
prohibiting foreign nations from owning natural
resources in Mexican met with little success.


83
In this period, the border area prospered from
increased U.S. investments in trade, tourism and
manufacturing. As a result of the increase in manufac-
turing the northern area became responsible for most of
the country's industrial production outside of the
Federal District. By 1960, the border was doing nearly
twice as much trade with the U.S. as it was doing with
CO
the interior of Mexico. This heavy dependence on
trade with the U.S. contributed to Mexico's negative
balance of payments.
Although much economic growth took place in the
region, crowding and underemployment at the border
CO
increased and the gap between rich and poor widened.
In addition to the prospect of higher industrial wages,
migrants from the interior were also drawn to the border
in the hope of becoming "braceros" (literally one who
works with arms) in the U.S. The bracero program began
during World War II when the U.S. was experiencing a
shortage of manpower. The program resulted from a
contract between the U.S. and Mexican governments under
which Mexican workers could migrate to'the U.S. to do
railroad and agricultural work. The railroad program
lasted only until 1946 while the agricultural program
continued until 1965.
Migration was also stimulated by increasing
hardship in the countryside. With credit difficult or


84
impossible for the poor to obtain, the number of
landless peasants went from 2.3 million in 1950 to 3.3
million in 1960. The government's commitment to
commercial farming through publicly financed irrigation
projects and credit outstripped its declarations of
support for land reform in behalf of the landless. The
development of the manufacturing sector through foreign
investments did not produce enough jobs to keep pace
with increasing landlessness and underemployment in the
countryside. This was partly due to the capital
intensive nature of these investments.
The inability of the northern cities and other
urban areas to absorb surplus labor from the countryside
led to high unemployment rates, and an eventual decline
in wages.. State control of the labor unions severely
restricted their ability to unite with new workers. The
resulting decline in real wages actually diminished pro-
ductivity according to James Cockcroft, and hindered the
development of domestic markets. These two factors,
Cockcroft argues, made Mexican products less competitive
on the world market.
With lowered productivity, declining competi-
tiveness and the negative balance of payments the
government clearly lost bargaining power in relation to
U.S. capital during this period. If the working class
had had greater freedom to unite and organize, it is


8.5
possible that Mexican goods would have been more
competitive since productivity might well have increased
and Mexican industrialists would have had the advantage
of larger domestic markets. These advantages would have
given the state more leverage in its dealings with U.S.
capital.
These advantages were foregone, however, in
favor of import substitution policies which immediately
benefited Mexican investors allied with U.S. capital.
These investors were a small group, too small to provide
the much needed domestic markets for Mexican goods.
With the working class co-opted and disunited, however,
Mexican capital had more power to influence the state
especially in conjunction with U.S. capital, in its own
behalf.,
To carry out its plan for import substitution,
the government had to maintain control over the work
class. To affirm its legitimacy and secure the loyalty
of workers, it offered social reform programs. In
addition, government controlled union leaders were
rewarded with patronage for their cooperation. Where
these measures failed the government resorted to
physical force. Generally, the government was
successful in maintaining control over workers even as
it lost ground to capitalists.


86
Throughout the 1960's and 1970'.s many of the
historic borderland patterns continued. Tourism
continued to provide the main source of income directly
or indirectly for border city residents. The repatria-
tion of profits from American owned industries and
illegal importing by Mexican companies also continued.
Toward the late 1960's, prostitution and drug sales had
less appeal to American visitors than they once had had
as these things were becoming more available in the U.S.
Migrant workers continued to make their way to the
border in search of higher ,wage work there or in the
U.S. Thus the problems of crowding persisted.and were
aggravated in 1965 by the return of 200,000 former
braceros to the border.
Due to its mounting debt, the state limited its
spending on social programs form 1960 onward to just
over 20% of its total investment or a total of 1.4% of
the GNP.^ This was a very small amount compared to
that which was spent oh social programs in other Latin
American countries. This prevented the state from
falling back on social programs to meet the needs of
newly repatriated nationals as it had in the past. When
bracero workers returned, new measures had to be taken
to meet their needs and those of other migrants.
-During the 1960's and 1970's the government made
several efforts to increase industrialization in the


87
northern region. The BIP is the most significant of
these efforts. The Programs Nacional Fronterizo or
National Border Program (PRONAF) was established in 1961
to improve the industrial base in the northern border
area. Through PRONAF, the government hoped to retain
growing trade and increase sales of Mexican manufactured
goods along the border by attracting American consumers.
The government also hoped to turn the deteriorating
towns along the border into a showcase for visitors.
Through the program, the government offered tax and
freight subsidies for goods marketed at the border. It
also provided funds for the construction of museums and
other visitor attractions. The program, unfortunately,
did not meet with its expected goals. This was due
perhaps to the decline in American tourism at the border
during the 1960's.
The Articulos Ganchos or Enticement Items
Program which began in 1971 was also designed to assist
Mexican merchants by stimulating the consumption of
Mexican goods. This program permitted Mexican merchants
from outside the Free Zone in Baja California and Sonora
to import certain basic items duty free to resell in
their own communities. Merchants were required to stock
at least 50% national goods so that the consumption of
these goods would be encouraged. The government
intended to phase out the program once Mexican products


88
CQ
had become competitive with imports.
There were several problems with the Articulos
Ganchos Program. Consumers complained with they found
that many duty free items were being sold at higher
prices that those in the U.S. In addition, there were
complaints that not enough basic goods were being
stocked. Instead, merchants were mainly selling
electronic products to elite consumers. Many merchants
prospered by the program until the devaluation of the
peso in 1976 which put many out of business.
Under the Border Industrialization Program,
foreignmost U.S.owned corporations were encouraged
to relocate the labor intensive segments of their
operations within the designated twenty kilometer wide
zone along the border. U.S. Tariff Code section 806.30
and 807.00 already allowed duty free imports of U.S.
parts assembled in foreign countries with import taxes
on value-added only. In the BIP, there were no taxes on
profits as none were made in Mexico. While the Mexican
government required a 50% corporate tax, U.S. executives
commuting to Mexico were exempt from the 42% personal
income tax. In addition, the 49% limit on foreign
ownership of multinational enterprises was suspended and
the Mexican government guaranteed against expropriation
or nationalization of foreign owned industries in the
BIP. There were restrictions, however. Investors


89
could not compete for Mexican markets. Land within a
62-mile zone along the border could not be owned by
foreign interests although it could be leased through a
fin
local bank. u Employers were required to pay workers 8%
of their pre-tax profits^ and minimum wages of $.50-
percent of assembly plant workers were to be Mexican.
Executives and technical personnel could be exempted
from this percentage, however.
CONCLUSION
Throughout the last 200 years, the economies of
the U.S. and Mexico have developed in a complementary
fashion. Of the two systems, the U.S. has been by far
the more dynamic. Its unremitting expansion has let it
into direct geographical, political and economic
confrontation with the more stagnant Mexican system.
Mexico has responded by alternately absorbing and
resisting the pressures of U.S. capital. Smuggling,
trade wars, and the migration of labor and capital are
all symptoms, of gross disparities in the two systems
and their increasing proximity to each other. In spite
Of setbacks, the U.S. has generally emerged from
conflict with Mexico in the stronger position. Mexico,
on the other hand is usually weakened by this conflict.
Thus U.S. economic progress has been complemented by the
underdevelopment, or loss of territory, and resources,


90
of Mexico. As seen in this chapter, the Mexican border
region is perhaps the most extreme example of Mexico's
vulnerability to the vicissitudes of the U.S. economy.
The BIP represents a major turning point in the
historic development of the Mexican state. As far back
as the Porfirian period, the state recognized its own
interests as distinct from those of U.S. and other
foreign capital. The government's debate over.whether
to.support the Free Zone was to a large extent, a debate
over the best way to resist the pressures of U.S.
expansion. Supporting the Free Zone meant appeasing
private interests and government officials along the
border. This, in turn, could prevent rebellion and
separation of the border. This, in turn, could prevent
rebellion and separation of the border. In addition, it
prevented consumer dependence on the U.S. economy and
the associated erosion of border settlements. Yet,
paradoxically, in terminating the Free Zone, the
government claimed that it was concerned about the
excessive dependence of the border on the U.S. In both
cases the border economy remained economically
unintegrated into the rest of the Mexican economy and
was therefore forced to depend on the U.S. The Mexican
government recognized in each case, however, that its
own interests and the interest of the nation as a whole


91
were separate from and, in fact, opposed to those of
U.S. capital.
During the Cardenas period when the state
finally assumed its revolutionary prerogatives it became
more strident than ever in its opposition to U.S.
capital. Then, as during the Porfiriato, there were
limits to this opposition. Yet the state found power to
maneuver within those limits to thwart the immediate
demands of foreign capital.
The BIP, however, is a product of the declining
state power to maneuver in opposition to these demands.
Although the state justifies the program in terms of
employment, national development, and improvement in the
balance of payments, the state has attempted to achieve
these goals by identifying national needs with those of
U.S. capital, a clear break with its past approach. The
result has been that U.S. capital has been able to
satisfy its needs by advancing more rapidly than ever
toward the heartland of Mexico. As in the past during
periods of increased foreign investments, the needs of
Mexican workers and the Mexican economy are subordinated
to the interests of U.S. capital in the BIP.


92
NOTES
1. Fernandez, Raul, The United States-Mexico Border:
A Politico Economic Profile (Notre Dame: University of
Notre Dame Press, 1977) p. 44.
2. Ibid., pp. 24-38.
3. See Fernandez, The United States-Mexico Border and
Mario Barrera, Race and Class in the Southwest: A
Theory of Racial Inequality (Notre Dame and London:
University of Notre Dame Press, 1979).
4. Barrera, Race and Class in the Southwest.
5. For a thorough discussion of the differences
between these two land holding systems see John R. Van
Ness, "Spanish American vs. Anglo American Land Tenure
and the Study of Economic Change in New Mexico", The
Social Science Journal (October 1976)
6. Fernandez, The United States-Mexico Border, pp. 45-
46.
7. Weber, David, The Mexican Frontier, 1821-1846: The
American Southwest Under Mexico (Albuquerque University
of New Mexico Press, 1982) pp. 243.45.
8. Ibid.
9. Ibid., p. 95.
10. Ibid., P. 186.
11. Ibid., pp. 187-88.
12. Rosenbaum, Robert J., Mexicano Resistance in the
Southwest: The Sacred Right of Self-Preservation
(Austin and London: University of Texas Press, 1981).
13. Martinez, Oscar, Border Boom Town: Ciudad Juarez
Since 1848 (Austin and London: University of Texas
Press, 1978) pp. 10-12.
14. Ibid.
15. Hansen, Niles, The Border Economy: Regional
Development in the Southwest (Austin: University of
Texas Press, 1981) p. 31i
16. Martinez, Border Boom Town, p. 14.


93
17. Fernandez, The United States-Mexico Border, p. 82.
18. Martinez, Border Boom Town, p. 14 and Fernandez,
The United States-Mexico Border, p. 78.
19. Fernandez, The United States-Mexico Border, p. 78.
20. Ibid., p. 79.
21. Martinez, Border Boom Town, pp. 16-17.
22. Ibid.
23. Hansen, Roger, The Politics of Mexican Development
(Baltimore: Johns Hopkins Press 1979).
24. Hamilton, Nora, The Limits of State Autonomy: Post-
Revolutionary Mexico (Princeton: Princeton University
Press, 1982) p.20.
25. Fernandez, The United States Mexico Border, p. 25.
26. Martinez, Border Boom Town, p. 26.
27. Ibid., p. 28. ,
28. Ibid.
29. Fernandez, The United States-Mexico Border, p. 95.
o CO Ibid., p. 98.
31. Ibid., p. 99.
32. Martinez, Border Boom Town, p. 35.
33. Ibid., p. 254.
34. Ibid., p. 44.
35. Ibid., p. 55.
36. Hamilton, The Limits i Df State Autonomy, p. 70.
37. Cockroft, James D., Mexico: Class Formation, Capi
tal Accumulation, and the State (New York: Monthly
Review Press, 1983) p. 105.
38. Ibid.
39. Fernandez, The United States-Mexico Border, p. 9.


94
40. Cockroft, Mexico, p. 106.
41. Ibid., p. 40.
42. Martinez, Border Boom Town, pp. 59-60.
43. Martinez, Border Boom Townf pp. 68-70.
44. Ibid., p. 66.
45. Ibid., p. 71.
46. Hansen, The Politics of Mexican Development.
47. See Cardoso, Lawrence A., Mexican Emigration to the United States 1897-1931: Socio Economic Patterns (Tuc-
son, Arizona: The University of Arizona Press, 1980)
48. tory Kirstein, Peter N., Anglo Over Bracero: A His- of the Mexican Worker in the United States from
Roosevelt to Nixon (SanFrancisco: R and E Research
Associates, 1977).
49. Cockcroft , Mexico, pp. 130-31.
50. Ibid., p. 136.
51. Hamilton, The Limits of State Autonomy, p. 43.
52. Ibid., p. 191.
53. Martinez, Border Boom Town, p. 99.
54. Ibid., p. 101.
55. Hansen, The Politics of Mexican Development.
56. Cockcroft , Mexico, p. 255.
57. Fernandez , The United States-Mexico Border, p. 123.
58 Hansen, The Politics of Mexican-Development, p. 85.
59. Martinez, Border Boom Town, p. 129.
60. Howe, Carolyn, "Multinationals and Labor Unity:
Both Sides of the Border," Southwest Economy and
Society (Fall, 1978) and Cameron Duncan, "The Runaway
Shop and the Mexican Border Industrialization Program,"
Southwest Economy and Society (Oct-Nov., 1976).