Written by: Daniela Cruz y Corro
An analysis on Mexican political economy’s principal obstacles
Developing countries tend to be affected by a myriad of problems that hinder their capacity to thrive and prosper in economic, political and social terms. Some of the issues limiting the potential of such countries include but are not limited to a legacy of extractive institutions, growing inequality at the domestic level, high levels of corruption, clientelistic use of social programs and overall political inefficiency with weak bureaucracies. Mexico suffers from these shortcomings in several regards.
Mexico is in a dire situation, corruption, clientelism, the dysfunctional administration of public services as well as a meager bureaucracy are examples of a state which doesn’t have the capacity to implement the policies it needs for its development. The solutions to these deep-rooted problems lie in building a stronger state that can have an influential intervention to reinforce institutions needed for the implementation of economic and political policies which correct the current circumstances. However, state capacity must be defined in terms of the pursuit of collective goals in self orienting organization that incentivize individual members to work together, those organizations and institutions need to have embedded autonomy as well as coherence to be able to transform the current environment (Evans, 2014).
The objective of this analytical essay is to study Mexico’s current situation as a result of failed state capacity and to propose policies which can strengthen the state’s authority, capacity and legitimacy enough to tackle the issues discussed.
The following diagnosis of Mexico’s situation is a representation of how a lack of state authority and capacity results in economic and political shortcomings. According to Hanson (2014), state authority is a necessary condition for economic activity to produce long-term economic growth. Weak states cannot provide the basic requirements of a modern economy: policy stability, enforcement of contracts, infrastructure, and public services. Furthermore, deficient state capacity affects rulers’ incentives by promoting neo-patrimonial rule. The anatomy of a capable state provides the tools necessary to implement developmental policies and can change the rulers’ incentives to pursue them (Hanson, 2014).
One of the country’s most important and permeable issue that hinders each state action is corruption understood as the appropriation if public resources for private gain and it is a characteristic of governments (Fukuyama, 2014). One of the most prominent consequences of corruption is the damage it makes to the perception of officials and politicians which reduces the legitimacy of the government and undermines the trust that is so necessary for the smooth operations of the state (Fukuyama, 2014).
Mexico is the most corrupt state in Latin America in terms of the provision of public goods, 51% of Mexicans bribe authorities to access public services (Animal Político, 2018).
Another important problem is the functioning of institutions since they are the backbone of the state because they serve as the patterns of interaction that govern and constrain relationships between individuals (North & Weingast, 2006). They are key determinants of the distribution of power and how it is used. Institutions in Mexico often act as extractive entities that benefit foreign investors and local elites (Acemoglu & Robinson, 2012). Extractive institutions are an example of how corruption or clientelism might function since they are defined by the extraction of incomes from subsets of society to hand to another subset of society, generally the local elite (Acemoglu & Robinson, 2012). One exemplary case of this in Mexico is the creation of a fund for those who lost their patrimonies to the September 19th earthquake of 2017 by the Senate. The resources accumulated through this fund eventually disappeared to the pockets of the senators of Congress with no explanation or consequences (Excelsior, 2018).
On the other hand, because of the previous issues, inequality keeps on growing with the gap between the poor and rich widening constantly. According to the World Bank, Mexico’s Gini index is 43.4 for 2016. Gini measures the extent to which the distribution of income among individuals or households within an economy deviates from a perfectly equal distribution, a Gini index of 0 represents perfect equality (World Bank, 2018).
An example of this is that one of the richest men alive shares the same country with more than 50% of the population in poverty (CONEVAL, 2016).
The following policies attempt to strengthen state capacity through the development of institutions by means of transparency, accountability and a strong, merit-based bureaucracy so that the pursuit of collective goals in self orienting organizations incentivize individual members to work together by being accurately embedded in society and by having enough autonomy to have the capacity to transform the current environment.
In first place, transparency is key; the access to reliable, unbiased information is essential for the citizenry to make decisions based on the performance of the politicians they elect. Accountability and transparency in social programs would help to avoid the misuse of them through clientelism and patronage. It is necessary to have more checks and balances regarding an independent government institution in charge of analyzing the performance of policies (Evans, 2014). Besides that, the provision of information should come from a third, independent party that fosters the access to unbiased and essential information.
Moreover, transparency must be accompanied by functional sanctioning mechanisms that are autonomous and independent from other state institutions (Lindstedt & Naurin, 2010).
In second place, a meritocratic bureaucracy would help fight corruption since the smooth performance of processes would avoid the need to accelerate the provision of goods and the demand for accountability with bribing, one of Mexico's most important challenges. Meritocracy would also foster the entry of highly skilled workers into the government apparatus, but better wages are also essential (Banerjee & Duflo, 2012). Without the need to bribe, rent seeking behavior would diminish because the incentives for their actions change (Hanson, 2014). However, meritocracy can only be built through the implementation of checks and balances on institutions and any government body capable of decision making. Veto actors could prevent the distribution of important positions as patronage within the government, policies would need to be overviewed to secure their coherence and viability. Checks and balances are not always beneficial, but as Mexico is still a developing state, the taming of politicians could foster the healthy development of governance and state authority (Hanson, 2014).
Besides transparency and checks, citizens need to be more involved in how the management of public goods functions. To achieve citizen engagement, participatory audits and oversight mechanisms are essential to avoid the clientelist misuse of policies (Mungiu-Pippidi, 2016). Along with citizen supervision, the equal distribution of public services would severe the dependent relationship with politicians in power that results in clientelism and patronage (Kurlantzick, 2016). Additionally, the involvement of civil society in the implementation and follow up of policies and social programs could foster the embedded autonomy in society that Evans proposes as one of the essential elements for state capacity (2014). The last policy discussed accompanies another element proposed by Banerjee and Duflo (2012) which is the change of power to citizens who are most affected by bad services. To measure and make accountability possible, the performance of institutions at local levels needs to be supervised.
The policies recommended previously indirectly tackle the systemic problems of clientelism, corruption, poor political function and inequality by suggesting the strengthening of state capacity. These policies should be focused on specific communities which would allow collective citizen engagement with specific objectives and measured with households as units of analysis (Krishna, 2011). Additionally, transparency and sanctioning could effectively reduce corruption (World Bank Group, 2016) because leaders would be sanctioned and elected based of their performance for the provision of public goods and healthy competition (Gerring, Bond, Brandt & Moreno, 2005).
The well-used concentrated power that signifies the changes in state capacity because of the policies discussed above results in steady economic growth. With enough authority and legitimacy, the state can implement policies which are well-designed, selective and thoroughly planned by a strong bureaucracy that can act cohesively (Hanson, 2014).
The changes could foster a change in perspective of the public sphere which would positively affect state embeddedness and promote citizen engagement because there would be an understanding of political agents as guardians of public interest (Krueger, 1990).
References
Acemoglu, D., & Robinson, J. (2012). Why Nations Fail. Crown Publishers.
Animal Político. (2018). México, el país más corrupto de América Latina; 51% de mexicanos ha sobornado autoridades. https://www.animalpolitico.com/2017/10/mexico-pais-mas-corrupto-america-latina-51-mexicanos-ha-sobornado-autoridades/
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CONEVAL. (2016). Pobreza en México. Retrieved from en https://www.coneval.org.mx/Medicion/Paginas/PobrezaInicio.aspx
Evans, E. (2014). The State as problem and as a solution.
Excelsior. (2018). Desaparece fondo de 50 mdp del Senado para damnificados por sismo 19S. https://www.excelsior.com.mx/nacional/desaparece-fondo-de-50-mdp-del-senado-para-damnificados-por-sismo-19s/1266167
Fukuyama, F. (2014). Political Order and Political Decay: From he Industrial Revolution to the Globalization of Democracy.
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Hanson, J. (2014). Forging and Taming Leviathan: State Capacity, Constraints on Rulers, and Development. International Studies Quarterly. June 2014. 380-392
Krishna, A. (2011). One Illness Away: Why People Become Poor and How They Escape Poverty. Oxford: Oxford University Press.
Krueger, A. (1990). "Government Failures in Development." Journal of Economic Perspectives.
Kurlantzick, J. (2016). State Capitalism: How the Return of Statism is Transforming the World Oxford University Press.
Lindsedt, C. & Naurin, D. (2010). Transparency is not enough: making transparency effective in reducing corruption.
North & Weingast. (2006). A conceptual framework for interpreting human history.
Pippidi, A. (2016). Learning From Virtuous Circles. Journal of Democracy, vol. 27.
World Bank Group. (2016). Making Politics Work for Development: harnessing transparency and citizen engagement.
World Bank. (2018). Gini Index (World Bank estimate). Retrieved from https://data.worldbank.org/indicator/SI.POV.GINI?locations=MX
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