Structural Adjustment and Economic Growth in Mexico

In November 1994, Mexico seemed poised to enjoy four or five per cent GDP growth in 1995. This growth would have been the most rapid since 1981, and would have represented a long-delayed return on the substantial investment Mexico had made in stabilization. Over the next 31 days, the value of the new peso fell from 5 to nearly 7.8 to the dollar, and foreign exchange reserves fell to critical levels, down from nearly US$ 26 billion in the first quarter of 1994. The pursuit of the elusive combination of growth with macroeconomic stability had clearly failed once again.