COUNTRY PROFILE: MEXICO

Formal Name: United Mexican States (Estados Unidos Mexicanos).

Short Form: México.

Term for Citizen(s): Mexican(s).

Capital: Mexico City (Ciudad de México), located in the Federal

District (Distrito Federal) with a population of about 8.6 million.

Major Cities: The Greater Mexico City metropolitan area encompasses Mexico City and several adjacent suburbs, including the populous cities of Ecatepec de Morelos (1.8 million residents) and Netzahualcóyotl (1.2 million). The total population of the Greater Mexico City metropolitan area is estimated at about 16 million. Other major cities include Guadalajara (1.6 million), Puebla (1.3 million), Ciudad Juárez (1.2 million), Tijuana (1.1 million) and Monterrey (1.1 million).

Independence: September 16, 1810 (from Spain).

Public Holidays: New Year’s Day (January 1); Constitution Day (February 5); Birthday of Benito Juárez (March 21); International Labor Day (May 1); Independence Day (September 16); Discovery of America (October 12); Anniversary of the Revolution (November 20); Christmas (December 25); and New Year’s Eve (December 31).

Flag: Three equal vertical bands of green (hoist side), white, and red; the

coat of arms (an eagle perched on a cactus with a snake in its beak) is

centered in the white band.

HISTORICAL BACKGROUND

Early Settlement and Pre-Columbian Civilizations: Nomadic paleo-Indian societies are widely believed to have migrated from North America into Mexico as early as 20,000 B.C. Permanent settlements based on intensive farming of native plants such as corn, squash, and beans were established by 1,500 B.C. Between 200 B.C. and A.D. 900, several advanced indigenous societies emerged. During this “Classic Period,” urban centers were built at Teotihuacán (in central Mexico), Monte Albán (in the territory now making up the state of Oaxaca), and in the Mayan complexes (in the modern-day states of Chiapas, Tabasco, Campeche, Yucatán, and Quintana Roo, as well as at sites in the modern-day countries of Honduras, Guatemala, and Belize). These advanced societies developed written languages, displayed high levels of occupational specialization and social stratification, and produced elaborate art, architecture, and public works. After the unexplained collapse of the Teotihuacán society around A.D. 650, the early civilizations of central Mexico were eclipsed by the Mayan city-states of the Yucatan Peninsula. The lowland Mayan communities flourished from A.D. 600 to A.D. 900, when they too abruptly declined. The Post-Classic period (from about 900 to 1500) was characterized by widespread migration throughout Mesoamerica and the re-emergence of the central valley of Mexico as the site of large-scale urban settlement and political power. By the 1300s, the Aztecs had established themselves on the site of present-day Mexico City. The militaristic and bureaucratic Aztec state ruled a far-flung tributary empire spanning much of Central Mexico.

Spanish Conquest, Colonization, and Christianization: During the early sixteenth century, Spanish military adventurers based in Cuba organized expeditions to the North American mainland. The first major military expedition to Mexico, led by Hernán Cortés, landed near present-day Veracruz in 1519 and advanced inland toward the Aztec capital of Tenochtitlán hoping to conquer central Mexico. By 1521 Spanish forces under Cortés, reinforced by rebellious Indian tribes, had overthrown the Aztec empire and executed the last Aztec king, Cuauhtémoc. The Spanish subsequently grafted their administrative and religious institutions onto the remnants of the Aztec empire. During the early years of colonial rule, the conquistadors and their descendants vied for royal land titles (encomiendas) and Indian labor allotments (repartimientos). The early colonial economic system was based largely on the ability of the encomienda holders (encomenderos) to divert Indian labor from agriculture to the mining of precious metals for export to Spain. The encomienda became the basis for a semi-autonomous feudal society that was only loosely accountable to the central authorities in Madrid.

New Spain and the Mercantile Economy: During the sixteenth and seventeenth centuries, Mexico experienced far-reaching demographic, cultural, and political change. New Spanish-style cities and towns were founded throughout central Mexico, serving as commercial, administrative, and religious centers that attracted an increasingly Hispanicized and Christianized mestizo population from the countryside. Mexico City, built on the ruins of Tenochtitlán, became the capital of Spain’s North American empire. Colonial society was stratified by race and wealth into three main groups: whites (European- and American-born), castas (mestizos), and native peoples; each had specific rights or privileges (fueros) and obligations in colonial society. New Spain was ruled by a viceroy appointed by the Spanish crown but in practice enjoyed a large degree of autonomy from Madrid.

Throughout the colonial period, Mexico’s economic relationship with Spain was based on the philosophy of mercantilism. Mexico was required to supply raw materials to Spain, which would then produce finished goods to be sold at a profit to the colonies. Trade duties that placed stringent restrictions on the colonial economies protected manufacturers and merchants in Spain from outside competition in the colonies. In the mid-eighteenth century, the third Bourbon king of Spain, Charles III, reorganized the political structure of Spain’s overseas empire in an effort to bolster central authority, reinvigorate the mercantile economy, and increase tax revenues. New Spain was divided into 12 military departments (intendencias) under a single commandant general in Mexico City who was independent of the viceroy and reported directly to the king.

War of Independence: The spread of late eighteenth-century Enlightenment philosophy, together with the egalitarian example of the American and French revolutions, motivated Mexican-born whites (criollos) to seek greater autonomy and social status within the colonial system. Discrimination against criollos in the granting of high offices had long been a source of contention between Spain and Mexico City. In 1808 the invasion of the Iberian Peninsula by Napoleon Bonaparte and the forced abdication of the Spanish king, Charles IV, disrupted Spain’s faltering authority over Mexico. Rejecting the puppet regime installed by France, the incumbent viceroy allied himself with the criollos and declared an independent junta ostensibly loyal to Charles IV. Allies of the Napoleonic regime responded by staging a coup and installing a new viceroy, an action that set the stage for war between criollos and Spanish loyalists. On September 16, 1810, Miguel Hidalgo y Costilla, a criollo parish priest, issued the Grito de Dolores (Cry of Dolores), a call to arms against Spanish rule that mobilized the Indian and mestizo populations and launched the Mexican war of independence. After a brief siege of Mexico City by insurgents in 1814, Spanish forces waged a successful counteroffensive that had nearly annihilated the rebels by 1820. However, the tide turned in favor of the criollos in February 1821, when a loyalist officer, Augustín de Iturbide, spurned the newly established constitutional monarchy in Spain and defected with his army to the rebels. Under the conservative Plan of Iguala, the rebel army agreed to respect the rights of Spanish-born whites (peninsulares) and preserve the traditional privileges (fueros) and land titles of the Roman Catholic Church. The Spanish, now outmaneuvered politically as well as militarily, lost the will to continue the war and recognized Mexican independence in September 1821.

Empire and Early Republic: Upon the withdrawal of Spain, Iturbide declared himself emperor of Mexico and Central America. Within months, however, his imperial regime was bankrupt and had lost the support of the criollo elite. In February 1823, Iturbide was overthrown by republican forces led by General Antonio López de Santa Anna. The Mexican empire was dissolved when the United Provinces of Central America declared their independence in July 1823. Clashes between the conservative and liberal parties dominated politics during the early republic. Conservatives, who advocated a centralized republic governed from Mexico City and the maintenance of clerical and military fueros, had the support of the Roman Catholic Church and much of the army. Liberals, on the other hand, advocated federalism, secularism, and the elimination of fueros. Under the federal republic in effect from 1824 to 1836, Mexico was ruled by a series of weak and perennially bankrupt liberal governments. General Santa Anna and his allies fashioned a centralized republic that held power from 1836 to 1855. Although nominally a liberal, Santa Anna was primarily a nationalist who dominated Mexico’s politics for two decades. Santa Anna’s efforts to assert Mexican government authority over Anglo-American settlements in Texas spurred that region’s secession from Mexico in 1835. Excesses committed by a punitive Mexican expedition against Texan garrisons at the Alamo and Goliad provoked strong anti-Mexican sentiment in the United States and galvanized U.S. public support for Texan independence. In April 1836, Texan forces defeated and captured Santa Anna at San Jacinto. During a brief captivity, the Mexican general signed a treaty recognizing Texan independence from Mexico.

Mexican-American War, Civil War, and French Intervention: A dispute with the United States over the boundaries of Texas led to war between the United States and Mexico in April 1846. Two U.S. Army columns advancing southward from Texas quickly captured northern Mexico, California, and New Mexico, repelling Santa Anna’s forces at Buena Vista. An amphibious expeditionary force led by General Winfield Scott captured the Gulf Coast city of Veracruz after a brief siege and naval blockade. Scott’s forces subdued Mexico City in September 1847, following a series of pitched battles along the route inland to the Mexican capital and its surrounding bastions. In the Treaty of Guadalupe Hidalgo that ensued, U.S. withdrawal was contingent on Mexico’s ceding of the territories of New Mexico and Upper California (the present-day states of California, Nevada, Utah, and parts of Arizona, New Mexico, Colorado, and Wyoming) and its acceptance of the incorporation of Texas into the United States.

In 1855 Santa Anna was ousted and forced into exile by a revolt of liberal army officers. A liberal government under President Ignacio Comonfort oversaw a constitutional convention that drafted the progressive constitution of 1857. The new constitution contained a bill of rights that included habeas corpus protection and religious freedom and mandated the secularization of education and the confiscation of Catholic Church lands. It was strongly opposed by conservatives and church officials who objected to its anticlerical provisions. Seeking to avoid armed conflict, President Comonfort delayed its promulgation and instead decreed his own moderate reform agenda known as the Three Laws. However, in January 1858 after unsuccessful efforts by Comonfort to craft a political compromise, the factions took up arms, and the government was forced from office. A three-year civil war between conservative and liberal armies, known as the War of the Reform, engulfed the country. After initial setbacks, the liberals, led by the prominent Zapotec Indian politician and former vice president Benito Juárez, gained the upper hand. In January 1861, the liberals regained control of Mexico City and elected Juárez president.

In January 1862, the navies of Spain, Britain, and France jointly occupied the Mexican Gulf coast in an attempt to compel the repayment of public debts. Britain and Spain quickly withdrew, but the French remained and, in May 1863, occupied Mexico City. Drawing on the support of the Mexican conservatives, Napoleon III installed Austrian prince Ferdinand Maximilian von Habsburg as Mexican Emperor Maximilian I. By February 1867, a growing liberal insurgency under Juárez and the threat of war with Prussia had compelled France’s withdrawal from Mexico. Maximilian was captured and executed by Juárez’s forces shortly thereafter. Juárez was restored to the presidency and remained in office until his death in 1872.

Porfirio Díaz Era: From 1876 until 1910, governments controlled by the liberal caudillo Porfirio Díaz pursued economic modernization all the while maintaining authoritarian political control. In contrast to his liberal predecessors, Díaz established cordial relations with the Catholic Church, an institution he considered central to Mexican national identity. The Díaz years, known as the “Porfiriato” saw heavy state investment in urban public works, railroads, and ports—all of which contributed to sustained, export-led economic growth. The Porfiriato governments encouraged foreign investment in export agriculture and the concentration of arable land in the form of haciendas. Although the urban middle class experienced substantial improvements in quality of life, Mexico’s peasant majority found its livelihood threatened by the loss of communal lands to the haciendas. In response to growing unrest in the countryside, Díaz created the Rural Guard, a paramilitary force that became notorious for its repressive tactics.

Mexican Revolution and Aftermath: By the turn of the century, opposition to Díaz had spread among dissident liberals who sought a return to the principles of the constitution of 1857. Following Díaz’s fraudulent reelection in 1910, several isolated rural revolts coalesced into a nationwide insurrection. Unable to regain control of several rebellious state capitals, Díaz resigned the presidency in May 1911 and fled to France. A provisional government under the liberal reformer Francisco I. Madero was installed but failed to maintain the support of radical peasants led by Emiliano Zapata, who was conducting a rural insurgency in southern Mexico. Amid general unrest, a counterrevolutionary government under Victoriano Huerta assumed power in February 1913. Huerta’s authority was undermined when U.S. Marines occupied Veracruz in response to a minor incident. Following Huerta’s resignation in July 1914, fighting continued among rival bands loosely allied with Venustiano Carranza and Francisco “Pancho” Villa. United States support for Carranza prompted Villa to retaliate by raiding several U.S. border towns. In response, the United States dispatched troops under General John J. Pershing on an unsuccessful expedition into northern Mexico to either kill or capture Villa. Carranza negotiated a cease-fire among several of the warring Mexican factions in December 1916 and restored order to most of the country by accepting the radical constitution of 1917. Rural violence continued in the south, however, until the assassination of Zapata by Carranza’s forces in November 1920. The Mexican Revolution exacted a heavy human and economic toll; more than 1 million deaths were attributed to the violence.

Consolidation of the Revolution: From the 1920s through the 1940s, a series of strong central governments led by former generals of the revolutionary armies governed Mexico. Most Mexican presidents complied with the constitutional provision mandating a single six-year term (sexenio) with no reelection. During the latter 1920s, President Plutarco Elías Calles established many of the institutions that would define the Mexican political system throughout the twentieth century. This system was based on an authoritarian state controlled by a hegemonic “revolutionary” party headed by a powerful president, economic nationalism, limited land collectivization, military subordination to civilian authority, anticlericalism, and the peaceful resolution of social conflict through corporatist representation of group interests. Tactics such as extensive use of state patronage, manipulation of electoral laws and electoral fraud, government propaganda and restrictions on the press, and intimidation of the opposition helped ensure the decades-long domination of government at all levels by the Institutional Revolutionary Party (Partido Revolucionario Institucional—PRI). Through their top-down control of the PRI, presidents acquired the power to handpick their successors, decree laws, and amend the constitution virtually at will.

The ideology of the revolutionary regime took a leftward turn during the sexenio of Lázaro Cárdenas (1934–40). Cárdenas nationalized Mexico’s oil industry and vastly expanded the acreage of nontransferable collectivized farms (ejidos) set aside for peasant communities. During World War II and the early years of the Cold War, the governments of Miguel Avila Camacho (1940–46) and Miguel Alemán Valdés (1946–52) repaired strained relations with the United States and returned to more conservative policies. In the postwar years, Mexico pursued an economic development strategy of “stabilizing development” that relied on heavy public-sector investment to modernize the national economy. Concurrently, Mexican governments followed conservative policies on interest and exchange rates that helped maintain low rates of inflation and attracted external capital to support industrialization. This dual strategy helped maintain steady economic growth and low rates of inflation through the 1960s.

Crisis and Recovery: During the presidencies of Luis Echeverría (1970–76) and José López Portilllo (1976–82), the public sector grew dramatically and state-owned enterprises became a mainstay of the national economy. Massive government spending was sustained in part by revenues from the export of newly discovered offshore oil deposits. By the late 1970s, oil and petrochemicals had become the economy’s most dynamic sectors. However, the windfall from high world demand for oil would be temporary. In mid-1981 Mexico was beset by falling oil prices, higher world interest rates, rising inflation, a chronically overvalued peso, and a deteriorating balance of payments that spurred massive capital flight. In August 1982, the Mexican government defaulted on scheduled debt repayments—an event that heralded a regionwide debt crisis. President López Portillo responded to the crisis by nationalizing the banking industry, further undermining investor confidence. His successor, Miguel de la Madrid Hurtado (1982–88) implemented economic austerity measures that laid the groundwork for economic recovery. In September 1985, the country suffered another blow when two major earthquakes struck central Mexico. Between 5,000 and 10,000 people are believed to have died and 300,000 left homeless in the worst natural disaster in Mexico’s modern history. Many victims lost their lives in modern high-rise buildings constructed in violation of safety codes. The high death toll and the government’s inadequate response to the disaster further undermined public confidence in the PRI-dominated political system.

In the run-up to the 1988 presidential and congressional elections, a splinter faction of left-wing former PRI members opposed to market reforms rallied behind the independent presidential candidacy of Cuahtemoc Cárdenas. In the first competitive presidential election in decades, the PRI candidate, Carlos Salinas de Gortari, was declared the winner with a bare majority of the vote. Numerous irregularities in the vote tally, including an unexplained shutdown of the electoral commission’s computer system, led to widespread charges of a fraudulent victory by the PRI. Overcoming a weak mandate and strong opposition from organized labor, President Salinas undertook a sweeping liberalization of the economy. Reforms included the privatization of hundreds of state-owned enterprises, liberalization of foreign investment laws, deregulation of the financial services sector, and across-the-board reductions in tariffs and nontariff trade barriers. Economic liberalization culminated in the negotiation of the North American Free Trade Agreement (NAFTA) with Canada and the United States in 1992. Salinas’s reforms were overshadowed by subsequent revelations of corruption within the top echelons of the PRI, as well as by the unexpected emergence of a rural insurgency in the southern state of Chiapas. Despite the assassination of the original PRI candidate, Luis Donaldo Colosio, the presidential election proceeded as scheduled in the fall of 1994. The replacement PRI candidate, Ernesto Zedillo Ponce de León, managed to stave off a serious challenge from the center-right National Action Party (Partido de Acción Nacional—PAN) to win the presidency.

Transition to Democracy: During the mid-1990s, an economic crisis stemming from an unsustainable current account deficit and mismanagement of the government bond market plunged Mexico into a severe recession. President Zedillo spent much of his sexenio restoring macroeconomic balance and responding to demands for greater accountability and transparency of public institutions. Zedillo also had to contend with the Zapatista rebellion in Chiapas, which highlighted the poverty and marginalization that characterized many of Mexico’s indigenous communities. In the political realm, the Zedillo administration advanced electoral system reforms that leveled the playing field for opposition parties and set the stage for a genuine transition to democracy. The July 1997 midterm elections left the PRI with a minority of seats in the Chamber of Deputies (the lower house of Congress), expanded opposition control of state governorships, and gave the left-wing Party of the Democratic Revolution (Partido de la Revolución Democrática—PRD) control of Mexico City’s government. The opposition’s momentum carried over into the September 2000 general elections. The PAN candidate, Vicente Fox Quesada, won the historic presidential race, becoming the first opposition head of state since the consolidation of the revolution. President Fox promised a deepening of Mexico’s economic and political reforms, declared “war” on organized crime, and planned to negotiate an immigrant “guest worker” program with the United States. Despite strong public support early in its term, the Fox administration was weakened by the PAN’s loss of congressional seats during the 2003 midterm elections and the government’s failure to craft a legislative coalition in support of its reform agenda. By the end of his term in 2006, much of President Fox’s structural reform program remained unfulfilled.

On July 2, 2006, Mexico held general elections for president, all seats in Congress, and several state governorships. The presidential race was closely contested between the PAN candidate, former Fox administration energy minister Felipe Calderón Hinojosa, and the PRD candidate, populist former mayor of Mexico City Andrés Manuel López Obrador. The PRI candidate, former Tabasco governor Roberto Madrazo Pintado, trailed in the race, as voters appeared wary of returning the PRI to the presidency. Opinion polls indicated that the election was largely a referendum on Mexico’s two decades of market-oriented economic reforms. Calderón promised to continue the reform agenda by promoting greater foreign investment and increasing the competitiveness of Mexico’s economy. He also pledged to continue Mexico’s recent shift toward a more internationalist foreign policy based on the promotion of free trade and regional democratic reform. By contrast, López Obrador vowed to focus on Mexico’s domestic problems, such as poverty and social inequality, and to halt so-called “neo-liberal” reforms. He promised to create thousands of jobs by funding massive public works projects and affirmed that he would seek to renegotiate NAFTA in order to protect Mexican farmers from an influx of imported U.S. corn. Further, López Obrador vowed to break up the unpopular commercial oligopolies that emerged from the privatization of state assets during the 1990s.

A preliminary vote count showed the results of the presidential election to be extremely close. Calderón held a slight lead of about 0.5 percent of the total votes cast. Uncertainty about the accuracy of the preliminary figures led both of the leading candidates to claim victory. On July 6, 2006, an official tabulation released by the independent Federal Electoral Institute (Instituto Federal Electoral—IFE) confirmed that Calderón had indeed won the election by a slim plurality of 35.89 percent versus López Obrador’s 35.31 percent of the vote (a margin of victory of 244,000 votes out of 41.8 million cast). In response, López Obrador alleged that the voting process had been marred by fraud and announced his intention of challenging the results before the Electoral Tribunal. The PRD leader also announced that he would convene a series of nationwide demonstrations by his supporters in an effort to pressure the election authorities to order a full manual recount of all ballots. López Obrador’s call for massive demonstrations raised widespread concern that protests could turn violent and undermine Mexico’s political stability and economy.

The results of the 2006 congressional races saw both the PAN and the PRD gain seats at the expense of the formerly dominant PRI. For the first time in its history, the PRI lost its plurality of seats in both houses of Congress, an event observers interpreted as a further sign of the party’s decline. Nonetheless, the PRI retained a sufficiently large bloc of seats to remain an influential congressional force and was well positioned to become a coalition partner of any future Mexican government. The PRD retained control of the powerful mayoralty of Mexico City. All three major parties held state governorships.

By mid-2006 Mexico had made progress in stabilizing the economy and reducing extreme poverty. However, significant disparities in wealth, high levels of crime, and corruption persisted. The less-developed states in the south continued to lag economically behind the more prosperous north and center, fueling illegal migration to the United States. Mexico’s economy was also lagging behind those of other middle-income countries, such as China, in terms of overall competitiveness. In addition to further consolidating Mexico’s transition to democracy, the 2006 general elections presented an opportunity to overcome executive-legislative stalemate and move toward consensus on economic and public-sector reforms.

GEOGRAPHY

Location: Mexico is located in the southern portion of North America,

bordering the southwestern United States from California to Texas. The

southernmost Mexican states of Quintana Roo, Campeche, and Chiapas

define the northern border of the isthmus of Central America.

Size: Mexico has an area of 1,964,375 square kilometers—making it

the third largest nation in Latin America (after Brazil and Argentina).

Land Boundaries: Mexico has 4,301 kilometers of international land borders: 3,152 kilometers with the United States, 956 kilometers with Guatemala, and 193 kilometers with Belize.

Disputed Territory: Mexico has no outstanding international territorial disputes.

Length of Coastline: Mexico has a 10,143-kilometer coastline: 7,338 kilometers on the Pacific Ocean and Gulf of California and 2,805 kilometers on the Gulf of Mexico and Caribbean Sea.

Maritime Claims: Mexico claims a territorial sea of 12 nautical miles, a contiguous zone of 24 nautical miles, an exclusive economic zone that extends 200 nautical miles off each coast and covers approximately 2.7 million square kilometers, and a continental shelf of 200 nautical miles or to the edge of the continental margin.

Topography: Mexico has a varied topography consisting mainly of plateaus in the eastern two-thirds of the national territory and a mountainous spine running through the western third of the country. The interior north of the Mexico City metropolitan area is mainly high plateau—known as the Mesa Central and Mesa del Norte. The average elevation in the plateaus ranges from about 900 meters in the north to 2,400 meters in the southern portion of the Mesa Central. In the far northwest, the Baja Peninsula stretches southeast from the U.S. border for 1,300 kilometers. The peninsula is extremely dry and rugged, with a very narrow coastal plain. The southern highlands, located south of the Mesa Central, contain a number of steep mountain ranges, deep valleys, and dry plateaus. The Yucatan Peninsula extends northeast from the Isthmus of Tehuantepec into the Gulf of Mexico. It is a flat, low-lying limestone plateau lacking in major rivers. Mexico has several massive mountain ranges, most of which extend from northwest to southeast: the Sierra Madre Occidental in the west, the Sierra Madre Oriental in the east, and the Sierra Madre del Sur in the south. Lesser ranges include the Sierra Madre de Chiapas and the Cordillera Neovolcánica—an east-to-west volcanic range spanning the breadth of the country just south of Mexico City. The country’s highest point, the Pico de Orizaba (5,636 meters), is located within the Cordillera Neovolcánica about 193 kilometers southeast of Mexico City. Mexico has extensive lowlands largely along the Gulf coast and in the Yucatan Peninsula.

Principal Rivers: Mexico has nearly 150 rivers, two-thirds of which empty into the Pacific Ocean and the remainder into the Gulf of Mexico or the Caribbean Sea. Most rivers are short and non-navigable, running from coastal mountain ranges to the coast. Water volume is unevenly distributed throughout the country. Five rivers—the Usumacinta, Grijalva, Papaloapán, Coatzacoalcos, and Pánuco—account for 52 percent of the average annual surface water volume. Most of the larger rivers are located in the southeastern part of the country and flow into the Gulf of Mexico. Northern Mexico contains less than 10 percent of the country’s water resources. The Río Bravo del Norte (known as the Rio Grande in the United States) defines Mexico’s northern border from Ciudad Juárez east to the Gulf of Mexico.

Climate: Mexico experiences great climatic variation owing to its considerable north-south extension and variations in elevation. The climate of much of northern and central Mexico is characterized by high temperatures and moderate to low rainfall. The highlands of the central plateau generally have a moderate climate with few extremes of hot or cold. Temperatures in Mexico City, for example, range from an average of 17° C in July to 12° C in January. The northern and central areas of the plateau are arid to semiarid; the drier regions receive about 300 millimeters of rainfall annually. Annual rainfall increases to about 600 millimeters in the southern part of the plateau, including the Mexico City area. The northern coastal areas, including Baja California, are arid. Rainfall along the Pacific Coast averages just 130 millimeters, as compared with 250 to 600 millimeters along the northern Gulf coast. Much of southern Mexico has a tropical climate with distinct rainy and dry seasons. Temperatures in the coastal regions range from 21° C to 27 ° C. Annual rainfall, which ranges from 1,500 millimeters to 2,000 millimeters, occurs mainly during the rainy season of May to October. The Gulf coast is subject to hurricanes.

Natural Resources: Mexico has abundant natural resources. In addition to extensive subsoil resources, the country has a rich biodiversity and varied wildlife. As of 2003, about 5 percent of Mexico’s land area was under a protected status. Protected sites included six wetlands of international importance (Ramsar sites) totaling 1.1 million hectares and 12 biosphere reserves totaling 6.8 million hectares.

Land Use: Although nearly half of Mexico’s total land area is officially classified as agricultural, only 12 percent of the total area is cultivated. Extensive irrigation projects carried out in the 1940s and 1950s greatly expanded Mexico’s cropland, especially in the north. One-third of Mexican territory is officially designated as grazing land. These lands are located mainly in the north. Some 9 percent of Mexico’s territory consists of forest or woodland, 59 percent of which is in the tropics, 15 percent in the subtropical zone, and 26 percent in the temperate and cool zones. Temperate forests cover some 49 million hectares, almost one-third of which are open to logging, mainly in the states of Chihuahua, Durango, and Michoacán.

Environmental Factors: Mexico faces significant environmental challenges affecting almost every section of the country. Vast expanses of tropical and subtropical forests in the south have been denuded for cattle raising and agriculture. Deforestation has contributed to serious levels of soil erosion nationwide. Soil destruction is particularly pronounced in the north and northwest. More than 60 percent of land is considered in a total or accelerated state of erosion. The result is a mounting problem of desertification throughout the region. Mexico’s coastline is threatened by inadequately protected petroleum extraction in the Gulf of Mexico, which has damaged marine ecosystems. Mexico City is one of the world’s most polluted urban areas. Vehicle emissions and other airborne contaminants have been blamed for a wide range of respiratory illnesses. Polluted water from Mexico City has been linked to congenital birth defects and high levels of gastrointestinal illnesses in the neighboring state of Hidalgo. Government antipollution measures have met with limited success.

Time Zones: Most of Mexico, including Mexico City, is in the Central Time zone (Coordinated Universal Time (UTC)/Greenwich Mean Time (GMT)–6 hours). The state of Northern Baja California is on Pacific Time (UTC/GMT –8 hours). The states of Baja California Sur, Sonora, Sinaloa, Chihuahua, and Nayarit are on Mountain Time (UTC/GMT –7 hours). In Mexico, however, Mountain Time is usually referred to as “Pacific Time” because most of these states border the Pacific Ocean. The state of Quintana Roo is on Eastern Time (UTC/GMT –5 hours). Mexico uses daylight saving time (DST). During 2006 DST was scheduled for April 2 to October 29.

SOCIETY

Population: In 2005 Mexico had an estimated population of 106.2 million. The population growth rate has been falling since the 1970s, declining from an average of 3.4 percent annually during the 1960s to 1.8 percent annually in the 1990s. The decrease is largely attributable to declining fertility. Emigration to the United States has increased significantly since the 1970s. The number of Mexican-born residents in the United States grew from an estimated 760,000 in 1970 to 8.5 million in 2000 (8.7 percent of Mexico’s population in the 2000 census). Immigration has not been a significant factor in population growth since the 1920s. Nationwide, population density was 52 residents per square kilometer according to the 2000 census. Density varied widely among the 31 states and Federal District from a high of 5,975 residents per square kilometer in the Federal District to a low of 12 residents per square kilometer in Baja California Sur. Mexico experienced heavy urbanization during the latter half of the twentieth century. In 1950 less than half the population (42.6 percent) lived in communities of 2,500 or more inhabitants. By 2005 more than three-quarters (76.2 percent) of Mexicans lived in such communities. The national population is heavily concentrated in central Mexico along a roughly northwest to southeast axis from Guadalajara to Veracruz. This area includes the heavily populated contiguous states of Jalisco, Guanajuato, Michoacán, Hidalgo, México, Distrito Federal, Morelos, Puebla, and Veracruz-Llave—which together are home to about half the national population. Major urban agglomerations are also found in the north centered on the cities of Ciudad Juárez, Tijuana, and Monterrey—with just over 1 million residents each. In the south, the largely Amerindian populations in the states of Chiapas and Oaxaca live mainly in small- to medium-sized towns and villages.

Demography: Mexico’s birthrate has been declining since the 1960s. During the 1990s, the rate of natural increase was 1.6 percent, half the rate observed during the 1960s (3.1 percent). In 2004 there were 18.8 live births and 4.5 deaths per 1,000 population. In 2005 life expectancy at birth was estimated at 75 years (72 years for men and 77 years for women). The total fertility rate (children born per woman) was 2.4 in 2005. Infant mortality stood at 21 per 1,000 live births versus 79.3 deaths per 1,000 live births in 1970. The 2005 age structure of the population was as follows: 0–14 years, 31 percent; 15–29 years, 28 percent; 30–49 years, 26 percent; 50–64 years, 10 percent; 65 years and older, 6 percent. The median age was 25.3 years, and females slightly outnumbered males by a ratio of 1.05:1. As a result of declining fertility and rising life expectancy, by 2025 Mexico’s population is predicted to age overall; the share of the youngest cohort (0–14) will decline to 24 percent and that of the oldest will rise to 10 percent.

Ethnic Groups: The two main ethnic categories of mestizo and Indian/Amerindian are defined broadly along cultural rather than racial lines. The term “mestizo” describes persons with a solely European background, those with a mixed European-indigenous ancestry, and indigenous people who have adopted the dominant Hispanic societal values. According to anthropologists, the terms “Indian” or “indigenous” describe persons who identify themselves as such, use an indigenous language in daily speech, remain actively involved in indigenous communal affairs, or participate in religious ceremonies rooted in native American traditions. Approximately 60 percent of the population is mestizo, 30 percent Amerindian or predominantly Amerindian, 9 percent white or European, and 1 percent “other.”

Languages: Spanish is the dominant language for both the mestizo and Indian populations. Approximately 6 million Mexicans spoke an indigenous language as a first language in 2000. The number of indigenous language speakers rose slightly in absolute terms from 1990 to 2000 but declined slightly as a percentage of the total Mexican population (7.2 percent in 2000 versus 7.8 percent in 1990). Indigenous speakers are highly concentrated in the southern states of Guerrero, Oaxaca, Quintana Roo, Chiapas, and Yucatán. Among indigenous language speakers, 83 percent also speak Spanish, while about 1 million are monolingual. Linguistically isolated communities are most prevalent in the states of Chiapas and Guerrero. Specialists have identified 12 distinct Mexican indigenous linguistic families, more than 40 subgroups, and at least 90 individual languages. According to the 2000 census, nearly 24 percent of all native speakers spoke Náhuatl, the language of the Aztec people and the most geographically dispersed native language. Other major indigenous languages include Maya, Zapotec, Mixtec, Otomí, Tzeltal, and Tzotzil.

Religion: Roman Catholicism is the main religion; 88 percent of the population five years of age and older identified themselves as Roman Catholic in the 2000 census. Protestants and Evangelicals were the second largest religious group, accounting for approximately 5 percent of the population. The rapid growth in Protestant and Evangelical membership slowed during the 1990s, averaging a 3.7 percent annual rise from 1990 to 2000 (versus 10 percent during the 1970s and 5 percent during the 1980s).

Education and Literacy: During the past several decades, Mexico has made significant advances in literacy and the provision of public education. In 2001 the adult literacy rate stood at 91.4 percent (93.5 percent among men and 89.5 percent among women). Mexican law mandates universal primary and secondary education. Nine years of education are compulsory, but in practice this legal requirement is largely ignored. In 2002 Mexico had 25.6 million students in primary, secondary, and postsecondary educational institutions—an increase of 11 percent since 1995. In 2002 the share of public spending invested in education was 24 percent—the highest among Organization for Economic Cooperation and Development (OECD) countries and almost twice as high as the OECD average level (12.9 percent). Most current spending at the primary and secondary levels goes to the compensation of staff, leaving few resources for infrastructure and training. Despite recent increases in funding, spending per primary student in Mexico is still very low, approximately one-quarter of the OECD average of US$5,313. The same holds true for lower secondary education. Enrollment rates in primary education are high; however, many students—especially those from poor families—do not complete high school, opting instead to enter the workforce. The performance of Mexican secondary school students in math, reading, and science is the lowest of all OECD countries and ranks well below the OECD average.

Health: Aggregate health statistics have improved greatly since the 1970s. However, Mexico lags well behind other Organization for Economic Cooperation and Development (OECD) countries in health status and health care availability. Total health care spending accounted for 6.2 percent of gross domestic product (GDP) in 2003; per capita spending on health care was US$583 (adjusted for purchasing power parity)—about a quarter of the OECD average. During 2003, 46.4 percent of health spending was paid from public sources—comparable to the share of public spending in the United States but significantly below the OECD average. Private financing in Mexico is almost entirely in the form of out-of-pocket payments, as only 3.1 percent of total expenditures on health are funded through private health insurance. In 2003 Mexico had 1.5 doctors and 2.1 nurses per 1,000 population, a significant increase in health care personnel over the previous decade but again below the OECD averages for these indicators. The mortality rate for children younger than five years was 28 per 1,000 live births in 2004. Ninety-one percent of the population had direct access to potable water and 77 percent to sanitation. In 2003 the incidence of HIV/AIDS among persons aged 15 to 49 was 0.3 percent.

Welfare: Mexico has made progress in reducing poverty since the late 1990s, performing above the Latin American average. However, nearly half of the population continues to live in poverty; about 15 percent of the total population subsists in extreme poverty with limited access to food and basic services. Residents of southern Mexico consistently trail the rest of the country in quality-of-life indicators. Urban workers in the informal sector of the economy do not have access to the same level of health care as their counterparts in the formal sector, nor do they qualify for retirement or pension benefits. About half the workforce is registered with the Mexican Social Security Institute.

ECONOMY

Overview: Mexico is a middle-income country with a developing economy that is closely linked to the much larger economy of the United States. Mexico’s economy ranks as “mostly free” in the 2006 Index of Economic Freedom (a joint publication of the Wall Street Journal and the Heritage Foundation). From the 1940s through the late 1960s, successive governments followed an economic strategy of import substitution and fiscal and monetary restraint intended to promote growth while holding inflation in check. During the 1970s, populist governments abandoned fiscal discipline and oversaw a massive expansion of consumer subsidies and state ownership of productive sectors. Unsustainable public-sector spending backed by over-reliance on oil export revenues and abundant international credit contributed to chronically high inflation and wild fluctuations in economic performance. As a result, the economy experienced spurts of rapid growth followed by sharp depressions in 1976 and 1982. The mid- to late 1980s were years of economic austerity and stagnant growth during which Mexico was able to balance its national accounts while combating high inflation. Gross domestic product (GDP) grew at an average rate of just 0.1 percent per year between 1983 and 1988. During these years, monetary policy was severely restricted and public-sector spending sharply curtailed.

The late 1980s and early 1990s saw far-reaching market-oriented structural reforms, including privatization of hundreds of state-owned enterprises, liberalization of foreign investment laws, deregulation of the financial services sector, and across-the-board reductions in tariffs and nontariff trade barriers. These reforms, which culminated in the ratification of the North American Free Trade Agreement (NAFTA) in 1994, attracted an influx of US$148 billion in foreign direct investment (FDI) during the next decade. From 1988 to 1994, GDP growth averaged 2.6 percent, sustained by exports and an influx of foreign capital. However, the collapse of the peso in December 1994 and the ensuing economic crisis erased most of the real wage gains from the previous years. In response to the 1994 crisis, Mexico passed legislation granting greater independence to its central bank. Growth resumed in the late 1990s, but the recovery was cut short by the spillover effects of the 2001 recession in the United States. Since 2002 a worldwide commodity price boom, a U.S. economic recovery, and sound macroeconomic policies have helped boost economic growth while allowing inflation to remain in the single digits. ((OT))

The economy is hampered by structural weaknesses that limit Mexico’s potential for future growth and job creation. Mexico’s workers are generally low skilled and have less schooling than workers in advanced industrial economies. This deficit in human capital manifests itself in terms of stagnant labor productivity and real wages, as well through the existence of a large “informal” labor sector that deprives the education, health care, and social security systems of crucial tax revenues. Income distribution remains highly unequal; about half of Mexico’s population lives in poverty.

Despite recent reforms, public policy continues to impose artificial restraints on the economy’s competitiveness and growth potential: rigid labor and commercial codes discourage hiring and inhibit informal workers from transitioning into the formal economy; the lucrative energy sector, which remains state-owned, suffers from numerous inefficiencies and undercapitalization; and the federal government relies heavily on the oil industry for revenues, which consequently renders public budgets vulnerable to cyclical fluctuations in hydrocarbon prices. While the liberalizing reforms associated with NAFTA have been a boon to northern and central Mexico’s manufacturing centers, few new jobs have materialized for the predominantly agricultural states in the south and southwest. This uneven development pattern has failed to slow large-scale wage migration to the United States. As global competition for capital investment has increased—particularly from low-cost manufacturing in Asia—Mexico’s status as a premier export hub for the North American market has eroded.

Gross Domestic Product (GDP): GDP stood at US$699.5 billion dollars in 2005 (US$1.07 trillion in terms of purchasing power parity), representing a per capita GDP of approximately US$6,500 (US$10,500 in terms of purchasing power parity)—the highest in Latin America. In early 2006, Mexico was entering the third consecutive year of economic expansion with predicted annual GDP growth of approximately 3.5 percent. Economic output in 2005 was divided among the sectors as follows: services, 69.5 percent; industry, 26.5 percent; and agriculture, 4 percent.

Government Budget and Public Finance: During 2005, federal government expenditures were US$184 billion (equivalent to 26 percent of gross domestic product), slightly outpacing revenues of US$181 billion. The public sector typically relies on profits from the state-owned hydrocarbons sector for a quarter of its revenues. Federal tax revenue is derived from several sources: corporate and individual income taxes, a nationwide value-added tax, and excise taxes on the mining industry. State and local governments rely heavily on federal government revenue transfers for their budgets.

Inflation: Inflation has trended generally downward since the late 1980s (when it exceeded 150 percent), thanks to a commitment by successive governments and the independent central bank to anti-inflationary fiscal and monetary policies. During the first quarter of 2006, core inflation stood at an annualized rate of approximately 3 percent.

Agriculture, Forestry, and Fishing: In 2005 agriculture accounted for only 4 percent of gross domestic product but employed 18 percent of the labor force. Agricultural practices range from traditional techniques, such as slash-and-burn cultivation of indigenous plants for family subsistence, to the use of advanced technology and marketing in large-scale, capital-intensive export agriculture. The staple food crops are maize, wheat, sorghum, barley, rice, beans, and potatoes. The principal cash crops are coffee, cotton, sugarcane, fruit, and vegetables. Other important agricultural goods include beef, poultry, dairy products, and wood products. Agricultural exports, valued at US$5.77 billion in 2004, are primarily destined for the United States. Forestry production is geared toward the exploitation of domestic fuelwood, sawlogs for construction, and pulpwood for processing in domestic paper mills. Mexico’s coastal fishing grounds offer a rich variety of fish and other seafood. The Pacific coast accounts for nearly three-quarters of Mexico’s total catch, producing mainly lobster, shrimp, croaker, albacore, skipjack, and anchovies. Mexico’s Gulf and Caribbean waters produce shrimp, jewfish, croaker, snapper, mackerel, snook, and mullet. In 2003 the total catch exceeded 1.5 million metric tons.

Non-fuel Mining and Minerals: Mexico has abundant mineral resources and has historically led the world in the production of silver. During 2004 silver production exceeded 3 million tons. Other significant mining products in 2004 were iron (6.9 million tons), sulphur (1.1 million tons), fluorite (0.84 million tons), sodium sulphate (0.61 million tons), zinc (0.38 million tons), copper (0.35 million tons), and manganese (0.14 million tons). Mexico also possesses substantial deposits of mercury, bismuth, antimony, cadmium, phosphates, and uranium.

Industry and Manufacturing: Manufacturing is the economy’s leading export sector, accounting for 84 percent of total export revenues (US$158 billion in 2004) and about a quarter of gross domestic product. About a quarter of Mexico’s labor force is engaged in some type of industrial or manufacturing activity. The manufacturing sector was transformed by the liberalizing reforms of the late 1980s and early 1990s, which privatized hundreds of state enterprises and greatly expanded opportunities for foreign direct and portfolio investment. Manufacturing attracts about half of all foreign direct investment in Mexico, two-thirds of which is concentrated in the maquiladora sector, comprising more than 2,000 businesses employing 1.13 million workers in 2004. Overall manufacturing output in 2004 was dominated by three activities: food, drink, and tobacco (29.5 percent); metals, machinery, and equipment (28.9 percent); and chemicals, petrochemicals, rubber, and plastics (14.9 percent). Other major components of manufacturing output included textiles, clothing, and leather goods (6.3 percent); metals (5.2 percent; and paper products (3.5 percent). Principal industrial centers are located in and around the Mexico City metropolitan area, Monterrey, and Guadalajara.

Energy: Mexico is the world’s sixth largest oil producer, extracting an average of 3.4 million barrels per day of crude oil in 2005. As of January 2005, Mexico had 14.6 billion barrels of crude oil reserves—the third largest reserves in the Western Hemisphere—mostly located in the Cantarell fields in the Gulf of Mexico. About half of Mexico’s crude oil production is consumed domestically, while the other half is exported—mainly to the United States. Over the past two decades, the oil sector’s share of total export revenues has fallen sharply as the economy has diversified and as an increasing share of production has been dedicated to meeting domestic demand. Crude oil exports accounted for 12 percent of total export revenues in 2004 versus 61 percent in 1985. Although production has remained relatively constant in recent years, few new oil reserves have been discovered. Mexico’s state oil corporation, Petróleos de Mexico (Pemex), operates an extensive pipeline network consisting of approximately 453 pipelines spanning 4,700 kilometers.

In addition to crude oil, Mexico has 420 billion cubic meters of proven natural gas reserves. Since the late 1980s, Mexican demand for natural gas has outpaced production, which stood at 37 billion cubic meters in 2004. Mexico also has 1.3 billion tons of recoverable coal reserves. During 2003 it produced 11.9 million short tons of coal while consuming 20.4 million short tons. Most coal consumption is used for electricity generation, while the remainder is used for steelmaking. Mexico has a single nuclear power plant, the 1,400-megawatt Laguna Verde plant near Veracruz.

Mexico generated 209.2 billion kilowatt-hours of electric power in 2003: 83 percent by conventional thermal sources, 9 percent by hydroelectricity, 5 percent by nuclear power, and 3 percent by renewable sources. The bulk of conventional thermal capacity in the national electricity grid consumes fuel oil, followed by coal and natural gas. The country consumed 193.9 billion kilowatt-hours of electric power in 2003. Demand is expected to grow by 6 percent per year during the next decade.

Banking and Finance: Banking and finance is the most advanced component of the services sector, attracting about 25 percent of total foreign investment. Mexico has a central bank and six types of banking institutions: public development banks, public credit institutions, private commercial banks, private investment banks, savings and loans associations and mortgage banks. Other components of the financial system include securities market institutions, development trust funds, insurance companies, credit unions, factoring companies, mutual funds, and bonded warehouses. Since 1994 Mexico’s central bank (Banco de México) has been largely autonomous. The bank is governed by a five-member board composed of a chairperson or “governor” and four “subdirectors.” The governor serves a six-year term; subdirectors serve eight-year terms and are appointed on a staggered basis. All members are appointed by the president but once confirmed may not be removed except in cases of gross misconduct or incapacitation as outlined in the Central Bank Law.

Services: Services (including financial services) make up the largest segment of the Mexican economy, accounting for 69.5 percent of gross domestic product (GDP) in 2005 and employing about 60 percent of the national workforce. In recent years, major transnational retailers have expanded their presence in the country. Merchandise counterfeiting and intellectual property rights crimes are pervasive within the informal retail sector, threatening the profitability of the formal retail sector. The tourism sector, which caters primarily to U.S. travelers, accounts for about 8 percent of GDP. Mexico is the primary foreign destination for U.S. travelers, receiving 11.6 million U.S. visitors in 2004.

Labor: During 2005, the labor force was estimated at 34.5 million (out of a total population of 106.2 million). Approximately 1 million new workers enter the labor force annually; however, the Mexican economy typically creates only about half as many new jobs. The Mexican labor market is characterized by the existence of a large informal sector in which workers are mostly unskilled, do not pay taxes, and do not receive benefits, and a formal sector in which jobs generally require more skills, and working conditions and benefits are regulated by strict labor laws. The informal sector is estimated to make up between 40 and 65 percent of the total labor force. During 2005 Mexico reported a low unemployment rate of approximately 4 percent; however, real wages have stagnated during the past decade, and 25 percent of the workforce is believed to be underemployed. In 2003 the labor force was distributed by occupation as follows: services, 58 percent; industry, 24 percent; and agriculture, 18 percent.

Foreign Economic Relations: Mexico’s extensive trade linkages to the United States dominate its foreign economic relations. During 2004 the leading markets for Mexican products in terms of percentage of total exports were the United States, 87.5 percent; Canada, 1.8 percent; Japan, 1.1 percent; and Spain, 1.0 percent. Mexico’s leading suppliers in terms of percentage of total imports were the United States, 56.3 percent; China, 3.8 percent; Germany, 3.6 percent; and South Korea, 3.0 percent. Since the early 1990s, Mexico’s foreign economic relations have emphasized active participation in the World Trade Organization (WTO) and the negotiation of free-trade agreements (FTAs)—most notably the North American Free Trade Agreement (NAFTA) with Canada and the United States in 1993. Mexico has entered into regional and bilateral FTAs involving more than 40 countries.

Trade Balance: Since the late 1990s, the overall merchandise trade balance has been slightly negative, largely as a result of growing deficits with the European Union and Asia (mainly China). During 2005 Mexico’s total merchandise imports were valued at US$223.7 billion versus US$213.7 billion in exports Mexico’s trade deficit with the rest of the world is largely offset by a trade surplus with the United States. This surplus has grown steadily since the late 1990s, driven initially by the boom in manufacturing exports and, more recently, by high world oil prices. During 2004, Mexico’s trade surplus with the United States stood at US$53.7 billion.

Balance of Payments: In recent years, Mexico has overcome a historical pattern of unsustainable high current account deficits. Since the late 1990s, the current account deficit has shrunk to sustainable levels of generally less than 3 percent of gross domestic product (GDP). Current transfers—made up largely of wage remittances from Mexicans living in the United States—have become an important contributor to Mexico’s external accounts, providing capital inflows estimated to be as much as 2.5 percent of GDP. In 2005 Mexico’s current account deficit was estimated at US$9 billion.

External Debt: Total external debt was US$145 billion in 2005. At 21 percent of gross domestic product (GDP), Mexico’s external debt-to-GDP ratio is one of the lowest in Latin America. The debt-service ratio (the ratio of debt service to export earnings) has declined from 25.5 percent in 2001 to an estimated 15.8 percent in 2005.

Foreign Investment: Mexico is the second largest host of foreign direct investment (FDI) in Latin America after Brazil. During the 10-year period following the ratification of the North American Free Trade Agreement (1994–2004), Mexico attracted a cumulative US$148 billion in FDI, about 50 percent of which was invested in manufacturing and another 25 percent directed toward the financial services sector. Net portfolio investment has been rising since 2002; by mid-2005, foreign holdings of government bonds totaled approximately US$10 billion, while foreign investment in the Mexican stock market exceeded US$85 billion.

Foreign Aid: The World Bank provides expertise and financial support to Mexico. Presently, the bank is financing 32 projects in the country, with an average annual commitment of up to US$1.7 billion. The World Bank’s 2005–2008 Country Assistance Strategy (CAS) for Mexico projects loans totaling about US$4.8 billion during the strategy’s four-year timeline and is designed to support the government’s commitment to fighting poverty and inequality.

Currency and Exchange Rate: Mexico’s currency is the peso (MXN). In July 2006, the exchange rate was approximately US$1=MXN11.

Fiscal Year: Calendar year.

TRANSPORTATION AND TELECOMMUNICATIONS

Overview: Mexico’s economy relies heavily on the country’s road network and maritime ports for the transportation of cargo. The extensive road system handles the bulk of domestic passenger and cargo surface transportation, while airports are struggling to keep up with the growth in international passenger travel. In recent years, the privatization of railroads and ports and the granting of toll road concessions have attracted substantial foreign investment and encouraged modernization of facilities.

Roads: Mexico has one of the most extensive road networks in Latin America, linking nearly all areas of the national territory. In late 2004, the country had 365,000 kilometers of roads, 105,000 kilometers of which were paved and 260,000 kilometers unpaved. The network includes 6,336 kilometers of modern toll highways. Although extensive, much of Mexico’s public road system is in poor condition as a result of insufficient investment in maintenance and an over-reliance on heavy trucks to haul overland cargo. Roads handle 59 percent of total cargo transportation and 99 percent of domestic passenger journeys.

Railroads: Railroads transport 10 percent of total cargo and play only a minor role in passenger travel. The rail system consists of 19,510 kilometers of track, nearly all of which is made up of 1.435-meter, standard-gauge line. The largest rail line historically has been the state-owned Mexican National Railways (Ferrocarriles Nacionales Mexicanos—FNM), which owns about 70 percent of total track. During the late 1990s, the FNM was broken up into regional rail lines and privatized. The newly privatized entities were granted 50-year leases to operate on the rail system’s main routes. By 2004, 81 percent of total rail traffic was handled by private companies. Mexico City maintains a subway system comprising eight lines with 135 stations and a total route length of 158 kilometers.

Ports: The maritime port system has grown rapidly from about 75 ports in the mid-1990s to 108 ports in 2005 with the expansion of international trade. The system has experienced an influx of foreign capital as a result of the comprehensive privatization of port facilities begun during the 1990s. The largest ports, located on the Pacific coast, include Manzanillo, Lázaro Cárdenas, Salina Cruz, Guaymas, and Mazatlán. Important ports on the Gulf Coast include Veracruz, Tampico, and Coatzacoalcos. During 2004 Mexican ports handled 266 million tons of cargo, including 120 million tons of petroleum and derivatives, 35 million tons of bulk mineral products, and 9 million tons of bulk agricultural products. Between 1997 and 2004, Mexico’s container ports doubled their cargo volume from 902,831 twenty-foot equivalent units (TEUs) in 1997 to 1,902,560 TEUs in 2004. Passenger arrivals, driven by the U.S. cruise industry, nearly tripled from 2.3 million in 1997 to 6.3 million in 2004. Mexico’s ports handled 1,202 cruise ship arrivals in 2004.

Inland Waterways: Mexico’s 2,900 kilometers of navigable rivers and coastal canals play only a minor role in the transportation system.

Civil Aviation and Airports: Mexico’s civil aviation system is extensive and includes 227 airports—35 of which are international airports—and approximately 1,500 airfields and airstrips nationwide. During 2005 Mexican airports handled 46 million passenger journeys, 27.8 million of which were conducted on domestic airlines and 18.3 million on international airlines. The busiest airports are Mexico City (Benito Juárez—MEX), Guadalajara (Miguel Hidalgo y Costilla—GDL), Monterrey (General Mariano Escobedo—MTY), and Cancún (CUN). Despite recent capital expenditures on terminals and runways, the largest airports are struggling to meet rising demand for air transportation services.

Telecommunications: Since the 1990s, telecommunications services have been transformed by privatization of the national telephone company and the advent of wireless technologies. Following the privatization of Teléfonos de México (Telmex) and the opening of the sector to other private carriers in the 1990s, fixed-line density rose from 6.4 lines per 100 in 1990 to 17 lines per 100 in 2004. Availability of residential fixed-line service varies greatly by region; Mexico City and the more developed northern states experience much higher service densities than the eight poorest southern states. The continued high cost of fixed-line services, together with an incomplete build-out of the fixed-line network, has contributed to a proliferation of mobile telephone use. The number of mobile cellular telephone accounts rose from 14 million in 2000 to more than 40 million in the first half of 2005. During 2004 the number of households with personal computers (PCs) stood at 137 per 1,000 residents. Paralleling telephone service, regional disparities are large; Mexico City and the northern states are well ahead of the south in home PCs per capita. During 2004 approximately 15 million Mexicans were classified as Internet users. Major telecommunications infrastructure includes 120 domestic satellite earth stations, 52 international stations and an extensive microwave radio relay network.

Index for Mexico:
Overview | Government

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