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Mexico: Privatization
Country Study > Chapter 3 > The Economy > Macroeconomic Management > Privatization

PRIVATIZATION


Prior to 1970, the Mexican government operated relatively few productive enterprises. The influx of oil revenue during the 1970s, however, allowed the government to vastly expand its patronage resources by assuming ownership of hundreds of unprofitable firms. By 1982 the Mexican government ran 1,155 businesses, among them public enterprises (65 percent with state majority ownership and 6 percent with state minority ownership), trust funds, and decentralized agencies. President de la Madrid announced in February 1985 that 237 parastatal, and that fifty of the remaining 209 enterprises were in the process of being sold, merged, or closed.

Despite its overall success, the privatization program eliminated more than 400,000 jobs between 1983 and 1993. Far more enterprises were closed than sold, and the overwhelming majority of the latter were sold through acceptance of private bids, mainly from wealthy Mexican investors, rather than through stock offerings to employees or the public. Some newly privatized enterprises -- such as Astilleros Unidos de Veracruz, Mexico's largest shipyard -- subsequently came close to bankruptcy, and several sugar mills closed soon after they were privatized.

The Zedillo government continued its predecessor's search for new privatization opportunities. During 1995 it awarded five concessions to joint ventures between Mexican and foreign companies to operate in the long-distance telecommunications market following the expiration of the Mexican Telephone (Teléfonos de México -- Telmex) monopoly in January 1997. New privatization opportunities were expected to boost private capital formation, which had slumped in late 1995. The planned privatization of the secondary petrochemicals operation, Mexican Petroleum (Petróleos Mexicanos -- Pemex), however, had not occurred by mid-1996, in part because of opposition from the oil workers' union and elements within the ruling party. The government also delayed its offering of railroad concessions for privatization, partly out of concern about job losses. Moreover, it had to rescue the operators of Mexico's new private toll roads, who had sharply raised tolls to recoup construction costs and then faced insolvency because they had misjudged the volume of traffic.




Last Updated: June 1996


Editor's Note: Country Studies included here were published between 1988 and 1998. The Country study for Mexico was first published in 1996. Where available, the data has been updated through 2008. The date at the bottom of each section will indicate the time period of the data. Information on some countries may no longer be up to date. See the "Research Completed" date at the beginning of each study on the Title Page or the "Data as of" date at the end of each section of text. This information is included due to its comprehensiveness and for historical purposes.

Note that current information from the CIA World Factbook, U.S. Department of State Background Notes, Australia's Department of Foreign Affairs and Trade Country Briefs, the UK's Foreign and Commonwealth Office's Country Profiles, and the World Bank can be found on Factba.se.

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