Mexico

MEXICO

LOCATION, SIZE, AND EXTENT
TOPOGRAPHY
CLIMATE
FLORA AND FAUNA
ENVIRONMENT
POPULATION
MIGRATION
ETHNIC GROUPS
LANGUAGES
RELIGIONS
TRANSPORTATION
HISTORY
GOVERNMENT
POLITICAL PARTIES
LOCAL GOVERNMENT
JUDICIAL SYSTEM
ARMED FORCES
INTERNATIONAL COOPERATION
ECONOMY
INCOME
LABOR
AGRICULTURE
ANIMAL HUSBANDRY
FISHING
FORESTRY
MINING
ENERGY AND POWER
INDUSTRY
SCIENCE AND TECHNOLOGY
DOMESTIC TRADE
FOREIGN TRADE
BALANCE OF PAYMENTS
BANKING AND SECURITIES
INSURANCE
PUBLIC FINANCE
TAXATION
CUSTOMS AND DUTIES
FOREIGN INVESTMENT
ECONOMIC DEVELOPMENT
SOCIAL DEVELOPMENT
HEALTH
HOUSING
EDUCATION
LIBRARIES AND MUSEUMS
MEDIA
ORGANIZATIONS
TOURISM, TRAVEL, AND RECREATION
FAMOUS MEXICANS
DEPENDENCIES
BIBLIOGRAPHY

United Mexican States
Estados Unidos Mexicanos

CAPITAL: Mexico City (México)

FLAG: The national flag is a tricolor of green, white, and red vertical stripes; at the center of the white stripe, in brown and green, is an eagle with a snake in its beak, perched on a cactus.

ANTHEM: Mexicanos, al grito de guerra (Mexicans, to the Cry of War).

MONETARY UNIT: The peso (p) is a paper currency of 100 centavos. There are coins of 1, 5, 10, 20, 50, 100, 500, 1,000, and 5,000 pesos and notes of 2,000, 5,000, 10,000, 20,000, 50,000, and 100,000 pesos. As of 1 January 1993, a new unit of currency (the new peso) was issued, worth 1,000 of the pesos that were used until 31 December 1992. p1 = $0.09116 (or $1 = p10.97) as of 2005.

WEIGHTS AND MEASURES: The metric system is the legal standard, but some old Spanish units are still in use.

HOLIDAYS: New Year's Day, 1 January; Constitution Day, 5 February; Birthday of Benito Juárez, 21 March; Labor Day, 1 May; Anniversary of the Battle of Puebla (1862), 5 May; Opening of Congress and Presidential Address to the Nation, 1 September; Independence Day, 16 September; Columbus Day, 12 October; Revolution Day (1910), 20 November; Christmas, 25 December. Movable religious holidays include Holy Thursday, Good Friday, and Holy Saturday. All Souls' Day, 2 November, and Our Lady of Guadalupe Day, 12 December, are not statutory holidays but are widely celebrated.

TIME: 6 am = noon GMT.

LOCATION, SIZE, AND EXTENT

Situated south of the United States on the North American continent, Mexico has an area of 1,972,550 sq km (761,606 sq mi), including many uninhabited islands off the e and w coasts, which have a combined area of 5,073 sq km (1,959 sq mi). Comparatively, the area occupied by Mexico is slightly less than three times the size of the state of Texas. Mexico extends about 3,200 km (2,000 mi) ssennw and 1,060 km (660 mi) enewsw. Bordered on the n by the United States, on the e by the Gulf of Mexico (including the Bay of Campeche), the Caribbean Sea, Belize, and Guatemala and on the s and w by the Pacific Ocean, Mexico has a total land boundary length of 4,353 km (2,704 mi) and a coastline of 9,330 km (5,797 mi).

Mexico's capital city, Mexico City, is located in the south central part of the country.

TOPOGRAPHY

Mexico's dominant geographic feature is the great highland central plateau, which occupies most of the width of the country, extending from the US border to the Isthmus of Tehuantepec. It averages 1,219 m (4,000 ft) in elevation in the north to over 2,438 m (8,000 ft) in the central part of the country. The plateau is enclosed by two high cordilleras (mountain chains), the Sierra Madre Oriental on the east and the Sierra Madre Occidental on the west, each separated from the coast by lowland plains. The ranges rise to over 3,000 m (10,000 ft), and some volcanic peaks exceed 5,000 m (16,400 ft); Pico de Orizaba, or Citlaltépetl (5,700 m/18,702 ft), Popocatépetl (5,452 m/17,887 ft), and Ixtaccíhuatl (5,286 m/17,342 ft) are the highest. The plateau falls to the low Isthmus of Tehuantepec and then rises again to Chiapas Highland to the south. The lowlands of Tabasco, Campeche, and Yucatán lie north and east of Chiapas.

There are no important inland waterways. Except for the Río Grande (known as the Río Bravo del Norte in Mexico), which extends for about 2,100 km (1,300 m) of the boundary with the United States, and the Papaloapan, an important source of water-power, the other rivers are short; they are the Lerma, Santiago, Usumacinta (part of the boundary with Guatemala), Grijalva, Balsas, Pánuco, and the Soto la Marina. The largest lake in Mexico is Lake Chapala, in Jalisco State, covering about 1,686 sq km (651 sq mi).

Located along the boundaries of the North American, Cocos, and Pacific tectonic plates, Mexico is part of the "Ring of Fire," a band of seismically active lands that surround the Pacific Ocean. One of the strongest earthquakes in history occurred in Michoacan on 19 September 1985. The 8.0 magnitude quake triggered deadly landslides and a tsunami with wave heights of up to 3 meters. The official death count was reported as about 9,500 people, with an additional 30,000 reported injuries. Another 8.0 magnitude quake occurred near the coast of Jalisco on 9 October 1995; though it was recorded as the largest earthquake of the year world-wide, only about 49 deaths were reported. A 7.6 magnitude earth-quake in Colima on 22 January 2003 left about 29 dead, 300 injured, and 10,000 homeless.

CLIMATE

The climate varies according to altitude and rainfall. The tropical and subtropical zone (tierra caliente), ranging from sea level to about 900 m (3,000 ft), consists of the coastal plains, the Yucatán Peninsula, and the lower areas of southern Mexico. These areas have a mean temperature of 2527°c (7781°f), with a minimum of 16°c (61°f) and a maximum of almost 49°c (120°f). The temperate zone (tierra templada), at elevations of 9001,800 m (3,0006,000 ft), has a temperate-to-warm climate and a mean temperature of 21°c (70°f). Mexico City and most other important population centers are in the cool zone (tierra fría), starting at about 1,800 m (6,000 ft), with a mean annual temperature of 17°c (63°f). The highest mountain peaks are always covered with snow.

Most of Mexico is deficient in rainfall, but two coastal belts covering about 12% of the total areafrom Tampico south along the Gulf of Mexico and from the state of Colima south along the Pacificreceive an average of from 99300 cm (39118 in) per year. Annual rainfall may exceed 500 cm (200 in) in Tabasco and Chiapas, while in parts of Baja California, virtually no rain falls. Precipitation is adequate in central Mexico except at altitudes above 1,800 m (6,000 ft), while the northern states are semidesert or desert. Most of the country receives its heaviest rainfall during the summer months.

FLORA AND FAUNA

Plant and animal life differs sharply with Mexico's varied climate and topography. The coastal plains are covered with a tropical rain forest, which merges into subtropical and temperate growth as the plateau is ascended. In the northern states there is a dry steppe vegetation, with desert flora over much of the area. Oaks and conifers are found in mixed forest regions along the mountain slopes. The Yucatán Peninsula has a scrubby vegetation.

Among the wild animals are the armadillo, tapir, opossum, puma, jaguar, bear, and several species of monkey, deer, and boar. Poisonous snakes and harmful insects are found. In the coastal marshes, malarial mosquitoes pose a problem. The only remaining elephant seals in the world are on Guadalupe Island west of Baja California. As of 2002, there were at least 491 species of mammals, 440 species of birds, and over 26,000 species of plants throughout the country.

ENVIRONMENT

One of Mexico's most widespread environmental problems is soil erosion; slash-and-burn agricultural practices, especially in the tropical zones, have also contributed to deforestation. Mexico loses its forest at a rate of about 1.1% annually due to agricultural and industrial expansion. Mexico has the fourth most extensive mangrove area in the world, covering approximately one million hectares. Mexico City, located more than 2,250 m (7,400 ft) above sea level and surrounded by mountains, has chronic smog, aggravated by the presence in the metropolitan region of thousands of factories, more than two million motor vehicles, and by open burning of garbage by slum dwellers.

Cities along the US-Mexican border also suffer from serious air pollution. In 1996, Mexico's level of industrial carbon dioxide emissions totaled 348.1 million metric tons. In 2000, total carbon dioxide emissions was at 424 million metric tons. Transportation vehicles are responsible for about 76% of the air pollution.

Water pollution results from the combined impact of industrial, agricultural, and public waste. Mexico's cities have produced over 12.9 million tons of solid waste per year along with about 164 million tons of industrial waste. Mexico has 409 cu km of renewable water resources. In the north, fresh water resources are scarce and polluted; in the central southeast region they are frequently inaccessible and of poor quality. About 72% of the nation's rural dwellers have pure drinking water.

An environmental protection statute adopted in 1971 has not been widely enforced; however, SEDUE, which was created in 1982, is fostering a more coherent approach to environmental issues. In 2003, about 10% of the total land area was protected. Mexico has three natural UNESCO World Heritage Sites and 58 Ramsar wetland sites. The Secretariat for Urban Development and Ecology (SEDUE) has the principal environmental responsibility.

According to a 2006 report issued by the International Union for Conservation of Nature and Natural Resources (IUCN), threatened species included 72 types of mammals, 57 species of birds, 21 types of reptiles, 190 species of amphibians, 106 species of fish, 5 types of mollusks, 36 species of other invertebrates, and 261 species of plants. Endangered species in Mexico include the volcano rabbit, Mexican grizzly bear (possibly extinct), Lower California pronghorn, Sonoran pronghorn, imperial woodpecker, southern bald eagle, American peregrine falcon, whooping crane, light-footed clapper rail, California least tern, maroon-fronted parrot, ridge-nosed rattlesnake, five species of turtle (green sea, hawks-bill, Kemp's ridley, olive ridley, and leatherback), two species of crocodile (American and Morelet's), and totoaba. At least 30 species have become extinct, including the Mexican dace, Durango shiner, Tlaloc's leopard frog, and the Caribbean monk seal.

POPULATION

The population of Mexico in 2005 was estimated by the United Nations (UN) at 107,029,000, which placed it at number 11 in population among the 193 nations of the world. In 2005, approximately 5% of the population was over 65 years of age, with another 31% of the population under 15 years of age. There were 96 males for every 100 females in the country. According to the UN, the annual population rate of change for 200510 was expected to be 1.9%, a rate the government viewed as too high. The projected population for the year 2025 was 129,381,000. The population density was 55 per sq km (142 per sq mi).

The UN estimated that 75% of the population lived in urban areas in 2005 (with 32% of the population concentrated in 14 urban areas), and that urban areas were growing at an annual rate of 1.62%. The capital city, Mexico City (México), had a population of 18,660,000 in that year. Other major cities and their estimated populations were Guadalajara, 3,905,000; Monterrey, 3,517,000; Toluca, 1,987,000; Puebla, 1,888,000; Tijuana, 1,570,000; Ciudad Juárez, 1,469,000; León, 1,438,000; Torreón, 1,057,000; San Luis Potosí, 927,000; and the Federal District, 500,000.

MIGRATION

As of 2000, the US Census Bureau estimated that 18,382,291 persons of Mexican ancestry were living in the United States, up from 8,740,000 in 1980. Formerly, under an agreement between the United States and Mexico, there was a large annual movement of Mexican agricultural laborers (braceros) into the United States. The United States has since banned such border crossings, and the 1986 Immigration Act imposed stiff penalties on employers who hire illegal aliens. Nevertheless, hundreds of thousands of illegal crossings still take place annually. According to Migration Information Source, in 2000 more than 1.6 million people were apprehended at the US-Mexico border. Bilateral attempts to deal with migration issues disappeared after 11 September 2001. In 2004, US President George W. Bush proposed a temporary worker program, acknowledging the US economy's demand for migrants. However, these proposals held no special relationship to Mexico-US relations, nor a means for immigrants to earn US residence. The pertinence to Mexican migration is that of the estimated 6.3 million unauthorized foreigners in the United States, about 57% are Mexicans. In January 2005 the Mexican government published a guide for Mexican immigrants to enter the United States safely. In that same year President Bush supported immigration reform by improving border security and then legalizing unauthorized foreigners in the United States. Also, in that same year, the Real ID Act established national standards for drivers' licenses, requiring legal residence in the United States within three years of application.

In the 1970s, there was substantial internal migration to the frontier areas, especially to the northern border states, to Quintana Roo and Guerrero in the south, and to government colonization projects such as Papaloapan, Veracruz, where the construction of irrigation, flood control, and hydroelectric projects attracted many people. Most notable, however, is the migration of rural inhabitants to Mexico's already overcrowded cities, creating huge urban slums, especially in Mexico City. Guadalajara and Monterrey, although growing rapidly, are attempting to use Mexico City's experience to plan urban and industrial growth. The great disparity between rural-zone, low-income, marginal groups producing only for their own consumption and highly developed urban and industrial sectors has produced acute social problems. Mexico remains a country of destination for Central American migrants and a country of transit for the considerable mixed migratory movement toward the North.

Mexico has long had a liberal asylum policy; the most famous exile in Mexico was probably Leon Trotsky, a revolutionary exiled from the USSR in 1929 who lived in Mexico City from 1937 until his assassination in 1940. In the 1930s and 1940s, Spanish republican refugees in the tens of thousands settled in Mexico, as did thousands of refugees from World War II. In the 1970s and 1980s, many victims of Latin American military regimes fled to Mexico. By the end of 1993, the number of persons from Guatemala, El Salvador, and other Central American countries living in Mexico was about 400,000, not counting 45,000 Guatemalan refugees living in camps. Over 13,000 Guatemalans repatriated in 1995 and 1996. In 2004 there were 161 asylum seekers in Mexico. In the same year 3,400 Mexicans sought asylum in Canada and 15,431 in the United States.

By 30 June 1999, 42,652 Guatemalan refugees had returned to Guatemala from Mexico. At that time, about 22,500 Guatemalan refugees remained in the southeastern states of Campeche (7,100), Quintana Roo (2,900), and Chiapas (12,500). These refugees were in the process of gaining full legal and socioeconomic integration under the Mexican government's Migratory Stabilization Plan, enacted in August 1996. Nearly 2,200 refugees in Campeche and Quintana Roo had already been naturalized in 1999; another 1,800 applications for naturalization were being processed.

As of 2004, Mexico was host to some 4,343 refugees, arriving from Latin American countries, Central Asia, the Middle East, and Africa. Most were in urban areas. In addition, there were 12,000 internally displaced persons mainly in the eastern Chiapas region; there as a result of the government's suppression in 1994 of the Zapatista uprising. In November 2004, the Mexico Declaration and Plan of Action to Strengthen the International Protection of Refugees in Latin America was adopted by the governments of the region.

Mexico is the country where the greatest number of US citizens, estimated as 200,000, live outside the United States. This may be due to the growing economic and business interdependence of the two countries under the North American Free Trade Agreement (NAFTA), and also that Mexico is considered an excellent choice for retirees. The official figures for foreign-born citizens in Mexico are 493,000 (since 2004), with a majority (86.9%) of these born in the United States (with the exception of Chiapas, where the majority of immigrants are from Central America).

In 2005, the net migration rate was an estimated -4.57 migrants per 1,000 population. In 2004, Mexico ranked second among the countries of the world in the amount of remittances from migrant workers, $17 billion up from about $6 billion in 2000.

ETHNIC GROUPS

The people of Mexico are mostly mestizos, a mixture of indigenous Amerindian and Spanish heritage. There are small numbers of persons of other European heritages, and small numbers of blacks are found in Veracruz and Acapulco. At last estimates, about 60% of the population was mestizo, 30% pure Amerindian, 9% pure white, and 1% other. Amerindian influence on Mexican cultural, economic, and political life is very strong.

LANGUAGES

Spanish, the official language, is spoken by nearly the entire population, thus giving Mexico the world's largest Spanish-speaking community; more Mexicans speak Spanish than Spaniards. Only a small number of inhabitants, about 1% of the population according to last estimate, speak only indigenous Amerindian languages or dialects. A larger percentage, some 7.5% at last estimate, speak some Amerindian language. There are at least 31 different Amerindian language groups, the principal languages being Nahuatl, Maya, Zapotec, Otomi, and Mixtec.

RELIGIONS

According to the 2000 census, about 88% of the Mexican population were at least nominally affiliated with the Roman Catholic Church and about 6% were Protestant. Protestant denominations represented include Presbyterians, Jehovah's Witnesses, Seventh-Day Adventists, Mormons, Lutherans, Methodists, Baptists, and Anglicans. There are small Greek and Russian Orthodox communities. There are also small numbers of Jews, Buddhists, and Muslims. While professing the Roman Catholic faith, a number of indigenous people include strong pre-Hispanic Mayan elements in their religion.

Roman Catholicism has increased greatly in activity since the 1940s; there have been religious processions and considerable construction of new churches in major cities. The bitter anticlericalism of the Mexican Revolution, of the 1917 constitution, and of the administration of President Plutarco Elías Calles (192428) had lessened by the 1960s. However, the constitution still stipulates that members of the clergy are prohibited from holding public offices. In 1992, full diplomatic relations with the Vatican were established.

Following an amendment to the constitution adopted in 1991, ecclesiastical corporations now have legal rights and can acquire property. All church buildings, including schools, however, remain national property. Priests now have political rights, and religious control over both public and private education prohibited earlier under the 1917 constitution has been restored. Religious groups must register with the Director of Religious Affairs (DAR) of the Federal Secretariat of Government. The DAR is also responsible for promoting and enforcing rules of religious tolerance. Certain Christian holidays are recognized as national holidays.

TRANSPORTATION

The local, state, and federal Mexican road system amounted to 349,038 km (217,102 mi) in 2003, of which 116,928 km (72,729 mi) were paved, including 6,979 km (4,341 mi) of expressways. Most roads are engineered for year-round service. In 2003 there were 19,846,100 registered vehicles, including 13,600,100 passenger cars and 6,246,000 commercial vehicles.

The country's major railroad system is the National Railway of Mexico. In 2004, the total route length was 17,634 km (10,968 mi) all standard gauge, and consisted of six integrated lines. A railway improvement program was carried out during 197579, but in the mid-1980s, the network was still in disrepair. The Mexico City subway system, totaling 120 km (75 mi), suffers from over-crowding. The system's technology, however, is being exported to other developing countries.

Mexico's 2,900 km (1,802 mi) of inland waterways and lakes, while navigable, are not important for transportation, but ocean and coastal shipping is significant. Of Mexico's 102 ocean ports, the most important are Tampico and Veracruz, on the Gulf of Mexico; Mazatlan and Manzanillo, on the Pacific coast; and Guayamas, on the Gulf of California. These five ports together handle about 80% of total general cargo tonnage for Mexico. Most Mexican ships are operated by the government-owned Maritime Transport of Mexico. The merchant marine in 2005 had 57 vessels of 1,000 GRT or more, totaling 649,389 GRT. The oil tanker fleet, owned and operated by Mexican Petroleum (Petróleos Mexicanos-PEMEX), the government oil monopoly, included 26 tankers.

Air transportation in Mexico has developed rapidly. In 2004 there were an estimated 1,833 airports and airfields. As of 2005, a total of 227 had permanent-surface runways, and there was also one heliport. Principal airports include Juan N. Alvarez at Acapulco, Cancun International at Cancun, Cozumel International at Cozumel, Miguel Hidalgo at Guadalajara, Gen. R. Buelna at Mazatlan, Manuel C. Rejon at Merida, Benito Juarez at Mexico City, Gral. Escobedo at Monterrey, and G. Diaz Ordaz at Puerto Vallarta. Mexican commercial aircraft carried about 20.688 million passengers on scheduled domestic and international flights in 2003. The main airline company is the newly privatized Aeroméxico.

HISTORY

The land now known as Mexico was inhabited by many of the most advanced Amerindian cultures of the ancient Americas. The Mayan civilization in the Yucatán Peninsula began about 2500 bc, flourished about ad 300900, and then declined until its conquest by the Spanish. The Mayas had a well-developed calendar and a concept of zero; skillful in the construction of stone buildings and the carving of stone monuments, they built great cities at Chichen Itzá, Mayapán, Uxmal, and many other sites. About 1200400 bc the Olmecs had a civilization with its center at La Venta, featuring giant carved stone heads and the first use of pyramids for worship among the Amerindians. In the early 10th century ad the Toltecs, under Ce Acatl Topiltzin, founded their capital of Tollan (now Tula) and made the Nahua culture predominant in the Valley of Mexico until the early 13th century. At that time, the Aztecs, another Nahua tribe, gained control.

The Aztec Empire, with its capital at Tenochtitlán (now Mexico City), founded in 1325, was essentially a confederation of allied and tributary communities. Skilled in architecture, engineering, mathematics, weaving, and metalworking, the Aztecs had a powerful priesthood and a complex pantheon dominated by the sun god and war god Huitzilopochtli, to whom prisoners captured from other tribes were sacrificed.

The empire was at its height in 1519, when the Spanish conquistadores, under Hernán Cortés, having set out from Cuba, landed at modern Veracruz; with superior weapons and the complicity of local chieftains, the Spaniards had conquered Mexico by 1521. First, Cortés imprisoned the emperor Montezuma II, who was wounded by stoning when he was released in an attempt to quell an uprising against the Spanish. Then Montezuma's nephew, Guatemotzin, drove the Spanish from Tenochtitlán on 30 June 1520, now called "la noche triste" ("the sad night"), during which Montezuma died, probably at the hands of the Spaniards. Eventually, Cortés returned to Tenochtitlán and defeated Guatemotzin.

The Spaniards brought Roman Catholicism to Mexico, imposed their legal and economic system on the country, and enslaved many of the inhabitants. The combination of Spanish oppression and the smallpox, influenza, and measles the conquistadores brought with them reduced the Amerindian population from an estimated 5 million in 1500 to 3.5 million a century later; not until late in the 18th century did Mexico match its pre-Columbian population. Gradually, the Spaniards extended their territory south-ward, to include, for a time, the captaincy-general of Guatemala, and northward as far as California, Nevada, and Colorado.

Spain ruled Mexico as the viceroyalty of New Spain for three centuries. Continued political abuses and Amerindian enslavement combined with the Napoleonic invasion of Spain in 1807 and consequential political uncertainty to produce a movement for independence. In 1810, a revolt against Spain was initiated by a priest, Miguel Hidalgo y Costilla, and a captain, Ignacio José Allende. Both were captured and shot by loyalists in 1811, but the revolt continued through another priest, José María Morelos y Pavón, who proclaimed Mexico an independent republic in 1813. Morelos and his followers were defeated and he was shot in 1815, but a swing toward liberalism in Spain in 1820 altered the political picture, leading Mexico's conservative oligarchy to favor independence as a way of preserving its power. In 1821, under the leadership of a rebel, Vicente Guerrero, and a former loyalist, Agustín de Iturbide, independence was again proclaimed and this time secured. Iturbide proclaimed himself emperor in 1822 but was deposed in 1823, when a republic was established; when he returned in the following year, he was captured and shot.

In the next 25 years, there were at least 30 changes of government. Gen. Antonio López de Santa Anna, who had participated in the overthrow of Iturbide, became the dominant figure in the 1830s and 1840s and attempted to centralize the new government. Texas gained its independence from Mexico in 1836 as a result of the defeat of Santa Anna at San Jacinto; in 1845, after a period as the Republic of Texas, it joined the United States. Mexico lost the subsequent war with the United States (184648), which began over a dispute about the border of Texas; under the Treaty of Guadalupe Hidalgo, Mexico recognized the Río Grande as the boundary of Texas and ceded half its territory (much of the present western United States) in return for $45 million. In 1853, the United States purchased a small portion of land from Mexico for another $10 million, which was widely regarded as further compensation for the land lost in the war.

A reform government was established in 1855 after a revolt against Santa Anna, and a new liberal constitution was adopted in 1857. Included in the reforms were laws abolishing military and clerical immunities. Article 27 prohibited corporations from holding land, and Article 123 established federal authority in matters of worship and religious discipline. Benito Juárez, the leader of the reform movement, became president in 1858. In 1861, during a period of civil strife, French troops under Emperor Napoleon III intervened in Mexico, ostensibly because Mexico had not paid its debts; in 1863, they captured Mexico City and installed Archduke Maximilian of Austria as emperor, with his Belgian wife, Carlota, as empress. After the French troops withdrew in 1866, partly because the United States protested their presence and partly because Napoleon needed them in France, forces loyal to Benito Juárez and led by José de la Cruz Porfirio Díaz regained control of the country. Maximilian was executed and the republic restored in 1867; Carlota, who had returned to Europe to plead with Napoleon to protect her husband, was driven mad by his death.

Díaz twice ran for president, in 1867 and 1871, each time leading an abortive military uprising after his electoral defeat. Finally, in 1876, Díaz seized power and assumed the presidency, a position he held (except for 188084, when a subordinate exercised nominal power) until 1911. Under his dictatorship, Mexico modernized by opening its doors to foreign investors and managers. At the same time, the so-called Pax Porfiriana meant suppression of all dissent, by persuasion or by force, and a complete lack of concern with improving the life of the Mexican peasant; an elite corps of mounted police, the Rurales, held the rural areas in check. As the president's aging circle of associates, called Científicos (Scientists), clung tenaciously to power, resentment among the middle classes and the peasantry continued to grow.

After Díaz was once again reelected to the presidency in 1910, the Mexican Revolution erupted. This revolution, which by 1917 had claimed perhaps one million lives, was, on the one hand, a protest by middle-class political liberals against the stultifying Díaz regime and, on the other, a massive popular rebellion of land-hungry peasants. The interests of these two groups sometimes coincided but more often clashed, accounting for the turmoil and confusion of those years. The spark that touched off the revolution was the proclamation on 5 October 1910 of the Plan of San Luis Potosí, in which the liberal politician Francisco Indalecio Madero, who had lost the vote to Díaz, called for nullification of the election. Riots in Mexico City forced Díaz to resign and leave the country in 1911, and Madero was elected president later in that year. Meanwhile, popular revolts led by Emiliano Zapata and Pancho Villa, who refused to submit to Madero's authority, led the country into chaos. Madero, accused by the Zapatistas of not giving land to the peasants, was ousted and murdered in 1913 by Gen. Victoriano Huerta, who had conspired with the rebels.

When Huerta, a corrupt dictator, was driven from power by Venustiano Carranza and Álvaro Obregón in July 1914, a full-scale civil war broke out. This phase of the revolution ended in February 1917, when a new constitution was proclaimed; this nationalistic, anticlerical document, considered by some to be the world's first socialist constitution, embodied the principle of the one-term presidency in order to prevent the recurrence of a Díaz-type dictatorship. Article 3 established government rather than church control over schools; Article 27 provided for public ownership of land, water, and minerals; and Article 123 ensured basic labor rights.

Carranza was elected president in 1917, but for the next decade Mexico was still beset by political instability and fighting between various revolutionary groups. Most of the revolutionary leaders met with violent deaths. Zapata, still regarded by many as a revolutionary hero, was assassinated in 1919, and both Carranza and Obregón (who was president during 192024) lost their lives in military coups.

Political stability at last came to Mexico with the formation in 1929 of an official government party that incorporated most of the social groups that had participated in the revolution; it has been known since 1945 as the Institutional Revolutionary Party (Partido Revolucionario InstitucionalPRI). Although its main pillars were, at least in theory, the peasants, workers, and other popular movements, it has also been closely allied with business since the 1940s. The most outstanding political leader of the post-1929 era was Lázaro Cárdenas, president during 193440, who sought with some success to realize the social goals of the revolution. His reforms included massive land redistribution, establishment of labor unions with strong bargaining positions, extension of education to remote areas of the country, and in 1938, the expropriation of foreign petroleum holdings, mostly US-owned. A compensation agreement with the United States was reached in 1944, when the two nations were World War II allies.

The postwar years have been marked by political stability, economic expansion, and the rise of the middle classes, but also by general neglect of the poorest segments of the population. One serious political disturbance came in 1968, the year the Summer Olympics were held in Mexico City, when the army and police clashed with students protesting political repression and human rights abuses. The number of students shot and killed has never been revealed. Yet, for many Mexicans, the murder of the students marked the unraveling of the authoritarian PRI, which could no longer hold on to power without resorting to extreme violence.

An economic boom during the late 1970s, brought about by huge oil export earnings, benefited a small percentage of the people, but millions of peasants continued to be only slightly better off than in 1910. Declining world oil prices in 1981 led to a severe financial crisis in 1982, a year of presidential elections. Mexico's new president, Miguel de la Madrid Hurtado, immediately introduced a series of austerity measures and promised a crackdown on corruption, which has long been a problem in Mexico. After the arrest of two government officials for misuse of public funds and fraud, the anticorruption drive appeared to languish; furthermore, public resentment of austerity increased. In 1985, when the PRI was accused of electoral malpractice in local and congressional elections, resentment boiled over in violent public protest. In October 1987, the PRI named Carlos Salinas de Gortari, a 39-year-old economist, as its candidate to succeed President de la Madrid. In September 1993, changes in federal electoral lawincluding an autonomous Federal Electoral Institutewere designed to make future elections more tamperproof. More transparent elections made it easier for more Mexicans to believe in their electoral system.

Mexico City was devastated by a major earthquake in September 1985. The official death toll was 7,000, although unofficial estimates were as high as 20,000; in addition, 300,000 were left homeless. There was widespread protest over the fact that many of the buildings destroyed had been built in violation of construction regulations and claims that foreign emergency aid had been misappropriated by the government.

In August 1992, formal negotiations regarding the North American Free Trade Agreement were concluded, whereby Mexico would join the United States and Canada in the elimination of trade barriers, the promotion of fair competition, and increased investment opportunities. NAFTA went into effect on 1 January 1994.

In January 1994, within hours after the NAFTA agreement went into effect, a primarily Amerindian group calling itself the Zapatista Army of National Liberation resorted to an armed uprising against the government. They initially took control of four municipalities in the State of Chiapas to protest what they regarded as government failure to effectively deal with regional social and economic problems. Two months after the Zapatista uprising, the nation witnessed its first high-level political assassination in over 60 years when PRI presidential candidate Luis Donaldo Colosio was murdered in Tijuana. His replacement, Ernesto Zedillo, was elected at the end of the year in a closely monitored campaign.

The devaluation of the peso in late December of 1994 threw the nation into economic turmoil, triggering its worst recession in over half a century. Over a million Mexicans lost their jobs, and the country's gross domestic product plummeted 10.5% in the first months of 1995. The United States responded to its neighbor's distress with a multimillion-dollar bailout that averted even worse damage to the economy.

The discontent bred by this economic crisis, together with continued high levels of poverty, rising crime and corruption, and political instability, led in 1997 to a rejection of Mexico's nearly 70-year-old system of one-party rule. In June of that year, the PRI lost its majority in the lower house of the National Congress, its control superseded by the combined power of the leftist Party of the Democratic Revolution (PRD) and the conservative National Action Party (PAN), as well as two smaller parties. The PRD obtained one of its most important victories in Mexico City, where former presidential candidate Cuauhtémoc Cardenas Solórzano was elected mayor. Both parties, especially the PAN, went on to win important gubernatorial seats throughout the country.

Traditionally, the president selected his successor from the PRI ranks, a practice known as the dedazo, which means pointing the presidential finger at the new candidate. But in 1999, Zedillo said there would be no dedazo, and replaced the practice with a presidential primary, which was won by party loyalist Francisco Labastida Ochoa. Leading to the 2 July presidential election, Labastida was facing increasing competition from PAN candidate Vicente Fox Quesada. A former Coca-Cola executive and governor of Guanajuato, Fox was gaining a wide following by openly attacking the PRI, even discussing sensitive issues that others would not touch, including the PRI's connections to illegal drug trafficking. In the meantime, Cardenas, who resigned as mayor of Mexico City in September 1999, was losing support in his third try at the presidency.

On 2 July 2000, after over seven decades of PRI rule, Fox was elected president in an upsetting victory over Labastida. Although he did not receive a majority of the votes, Fox won by a 7% margin. The vote was the cleanest in Mexico's history, passing standards of freedom and fairness, as well as remaining peaceful. Fox drew support from beyond his conservative PAN party, indicating voter support for his commitment to tackling government corruption and economic reform. Yet, by mid-2003, Fox's tenure had proven a disappointment. The president lost popularity after his two most symbolic legislative initiatives failed to pass the divided congress. First, the president failed to solve the indigenous revolt in Chiapas. Despite an effort to pass legislation championed by the Zapatista Army, Fox's own PAN party killed the initiative. Second, a tax reform aimed at increasing government revenues to beef up social spending was also significantly scaled back by the PRI and PRD opposition. President Fox's ambitious legislative and government agendas moved slowly and many Mexicans disapproved of the gridlock between the executive and the divided congress. Yet, the 2003 midterm parliamentary elections did not drastically change the composition of congress. Thus, President Fox was unable to push his reform package forward and will likely leave the presidency having fulfilled very few of his electoral promises.

The presidential elections, scheduled for 2 July 2006, were likely to reflect once again the three-way divide in the Mexican electorate. Former Mexico City mayor Andrés Manuel López Obrador stood as favorite to win with a plurality of votes. PAN's Felipe Calderón promised continuity of the good policies implemented by President Fox but needed to fight against the perception that Fox did not fulfill all of his electoral promises. PRI candidate Roberto Madrazo Pintado hoped to recapture the presidency for his party, but accusations of corruption and other scandals that have hurt the party were expected to play against his chances. In any event, the election was likely result in a divided congress and, thus, whoever was elected president would need to work with opposition parties to advance his agenda. Ever since the PRI lost control of the presidency, politics in Mexico have been characterized by gridlock. No single party has achieved commanding control of the executive and legislative branches, and obstructionist politics have dominated relations between the president and congress.

GOVERNMENT

Mexico is a federal republic consisting of 31 states and the Federal District. Its basic political institutions are defined in the constitution of 1917.

The president, elected for a six-year term (by universal adult suffrage beginning at age 18) and forever ineligible for reelection, appoints the attorney-general and a cabinet, which may vary in number. Although the constitution established separation of powers, in practice the Mexican chief executive traditionally dominated the legislative and judicial branches. Since the president is head of state, head of government, and commander-in-chief of the armed forces, and since the PRI enjoyed a clear majority in congress from 1934 to 1997, it was said that the only limit placed on the power of a president of Mexico is that of timesix years in office. Yet, as the PRI lost control of congress in 1997 and lost the presidency in 2000, real separation of powers has emerged under the 1917 constitution. Congress has become more powerful, although it has in practice used the power to obstruct, rather than influence, the executive's agenda. With the approval of congress, the president may intervene in the states, restricting their independence; also, under congressional authorization, he has certain legislative authority, especially in the regulation and development of commerce and industry. There is no vice president. If the president dies or is removed from office, congress is constitutionally empowered to elect a provisional president.

The bicameral congress, also elected by direct universal suffrage, is composed of a Senate (Cámara de Senadores), expanded from 64 to 128 members in 1994 (four from each state and four from the Federal District), and a Chamber of Deputies (Cámara de Diputados) made up of 500 members. Three hundred singlemember districts represent each 250,000 people or fraction above 100,000, with a minimum of two districts in each state; 200 members are allocated by proportional representation. No party is allowed to have more than 60% of the seats in the Chamber of Deputies. Senators are elected for six years (half the Senate is elected every three years) and deputies for three years, and both groups are ineligible for immediate reelection. All legislators have alternates who temporarily occupy their posts when they make use of their constitutional prerogative to request a leave of absence. The congress may legislate on all matters pertaining to the national government and the Federal District.

POLITICAL PARTIES

From 1929 to 1997, the majority party and the only political group to gain national significance was the Institutional Revolutionary Party (Partido Revolucionario InstitucionalPRI), formerly called the National Revolutionary Party (Partido Nacional Revolucionario) and the Party of the Mexican Revolution (Partido de la Revolución Mexicana). Three large pressure groups operate within the PRI: labor, the peasantry, and the "popular" sector (such as bureaucrats, teachers, and small business people). In 1997, for the first time in nearly 70 years, the PRI failed to retain a majority of seats in the 500-member lower house of congress, the Chamber of Deputies.

Of the major opposition parties, Party of the Democratic Revolution (PRD) advocates active government intervention in economic matters and questions close relations with the United States. The PRD has also voiced concerns about negative side effects of free trade policies. The PRD formed in 1991 and has gained electoral strength in urban areas, particularly Mexico City, whose local government elections it has dominated.

The conservative National Action Party (PAN) favors a reduced government role in the economy, backs close ties with the United States, and is closely linked to the Catholic Church. Vicente Fox, of the conservative PAN party, was elected on 2 July 2000, becoming the first non-PRI president in 70 years. That year, PAN also became the largest party in the 500-member Chamber of Deputies, with 223 seats. In the Senate, the PRI won 60 seats in the 128-member Chamber. The PRD won 53 seats in the Chamber and 17 in the Senate. Thus, no party holds majority control on either chamber of the Mexican congress. Yet, in the 2003 midterm elections, the PRI won a plurality of votes and secured 224 seats, just short of a majority. The PAN ended up in second place with 153 seats and the PRD obtained 95 seats.

LOCAL GOVERNMENT

Twenty-nine states of Mexico were created as administrative divisions by the constitution of 1917, which grants them those powers not expressly vested in the federal government; Mexico's two remaining territories, Baja California Sur and Quintana Roo, achieved statehood on 9 October 1974, raising the total to 31. Each state has a constitution, a governor elected for six years, and a unicameral legislature, with representatives elected by district vote in proportion to population. An ordinary session of the legislature is held annually, and extraordinary sessions may be called by the governor or the permanent committee. Bills may be introduced by legislators, by the governor, by the state supreme court, and by municipalities (a unit comparable to a US county). In addition to the 31 states, there is also one federal district comprising Mexico City, whose governor serves as a member of the cabinet. Many state services are supported by federal subsidies.

The principal unit of state government is the municipality. Mexico's 2,378 municipalities are governed by municipal presidents and municipal councils. State governors generally select the nominees for the municipal elections. Municipal budgets are approved by the respective state governors. During the seven decades of PRI rule, some local government elections were competitive. Until 1997, the president appointed the mayor of Mexico City. Political reforms allowed the first open elections in 1997. PRD candidate Cuauhtémoc Cardenas Solórzano was elected mayor. When he resigned to run for the presidency in 1999, Rosario Robles Berlanga became the first woman mayor of Mexico City. In 2000, PRD's Andrés Manuel López Obrador became the second democratically elected mayor of Mexico City. López Obrador's popularity as mayor has made him a prime candidate for the 2006 presidential election.

JUDICIAL SYSTEM

Mexico's judiciary, both federal and state, has been a separate branch of government since independence. Federal courts include the Supreme Court, with 11 justices; 32 circuit tribunals, and 98 district courts, with one judge each. Special courts include a fiscal tribunal and boards of conciliation and arbitration.

Supreme Court magistrates are appointed for 15-year terms by the president, with the approval of the Senate, and can be removed only by a guilty verdict after impeachment. The other justices are appointed for six years by the Supreme Court magistrates. The Supreme Court has both original and appellate jurisdiction in four divisions: administrative, civil, labor, and penal. Circuit courts hear appeals from the district courts.

The jury system is not commonly used in Mexico, but judicial protection is provided by the Writ of Amparo, which allows a person convicted in the court of a local judge to appeal to a federal judge. Capital punishment, except in the army for crimes against national security, was abolished by the penal code of 1 January 1930.

Although the judiciary is constitutionally independent and judges are appointed for life (unless dismissed for cause), there have been charges that judges are sometimes partial to the executive. Low pay and high caseloads contribute to a susceptibility to corruption in the judicial system. In unprecedented moves in 1993, the government issued an arrest warrant for obstructing justice and for bribery against a former Supreme Court Justice and three federal judges were dismissed for obstructing justice.

In 1995, congress passed a judicial reform law. The judicial reform law provides for a competitive examination for selecting most lower and appellate federal court judges and law secretaries. The Supreme Court has the authority to strike down a law for unconstitutionality. The judicial reform law provides that the Supreme Court may declare a law unconstitutional when one-third of the congress, one-third of a state congress, or the Attorney General asks the Supreme Court to review the constitutionality of the law.

The judicial trial system is based on the Napoleonic Code and consists of a series of fact-gathering hearings. The record of the proceeding is not available to the public.

After the 2000 presidential election and the end of PRI control of the presidency, the Supreme Court and the judicial power in general has shown signs of greater autonomy and more independence from the elected authorities. The judiciary has consolidated as an independent power of the Mexican state.

ARMED FORCES

In 2005, Mexico's armed forces had 192,770 active personnel, with reserves numbering 300,000. The Army had 144,000 personnel. Equipment included 264 reconnaissance vehicles, over 862 armored personnel carriers, and 1,774 artillery pieces. The Navy, including its naval aviation arm and Marines, had 37,000 personnel. Naval vessels included 1 destroyer, 10 frigates, and 109 patrol/coastal vessels. The Air Force had 11,770 personnel operating 107 combat capable aircraft, including 10 fighters and 17 fighter ground attack aircraft. The service also had 43 support and 71 utility helicopters. Paramilitary forces included an estimated 11,000 Federal Representative Police backed by a reserve rural defense militia of 14,000. The defense budget in 2005 totaled $3.09 billion.

INTERNATIONAL COOPERATION

Mexico is a charter member of the United Nations, having joined on 7 November 1945, and participates ECLAC and several nonregional specialized agencies, such as FAO, IAEA, the World Bank, UNESCO, UNHCR, ILO, and the WHO. The country held a seat on the UN Security Council from 200203. Mexico is a member of APEC, the Caribbean Development Bank, the European Bank for Reconstruction and Development, G-3, G-6, G-11, G-15, G-19, G-24, The Inter-American Development Bank, the Latin American Economic System (LAES), the Latin American Integration Association (LAIA), the OAS, the OECD, the Association of Caribbean States (ACS), and the Río Group. The country holds observer status in the Council of Europe.

Mexico, which for many years was the only Latin American nation to recognize Fidel Castro's Cuba, has based its foreign policy on the principles of nonintervention and self-determination of peoples, which it helped incorporate into the charter of the OAS in 1948 (Articles 1517). In 1993, Mexico signed the North American Free Trade Agreement (NAFTA), creating a free-trade zone comprising the United States, Mexico, and Canada. The agreement was ratified by all three governments in 1993 and took effect the following year.

In environmental cooperation, Mexico is part of the Basel Convention, Conventions on Biological Diversity and Whaling, Ramsar, CITES, the London Convention, the Kyoto Protocol, the Montréal Protocol, MARPOL, the Nuclear Test Ban Treaty, and the UN Conventions on the Law of the Sea, Climate Change, and Desertification.

ECONOMY

Traditionally, Mexico's economy has been predominantly agricultural, but by 2004 the primary sector contributed only 4% of the GDP and employed less than a fifth of the labor force. The secondary sectorindustrycontributed 27.2% of GDP and employed 24% of the labor force. Services is the largest sector, accounting for 68.9% of GDP and employing 58% of the work force. Mexico both exports a substantial amount of agricultural products (10% of exports) and imports substantial amounts (10% of imports) Mexico is self-sufficient in most fruits and vegetables and in beans, rice, and sugar, and it is approaching self-sufficiency in meat and dairy products. Marginal subsistence, however, is still the lot of much of Mexico's rural population. In 2003, the CIA estimated that 40% of the population were living below the poverty line. While this is an improvement on over 50% in the early 1980s, population growth means that this constitutes an increase in absolute numbers. Further, the government of Mexico's estimate for 2002 is that 54% of the population is lacking security in basic necessities. On the other hand, in 2002 it was estimated that 35.6% of the country's wealth was concentrated in the top 10% of population; the lowest 10% of the population had 1.6% of the wealth.

A great mining nation, Mexico is the world's leading producer of silver and is well endowed with sulfur, copper, manganese, iron ore, lead, and zinc. Since the 1920s, Mexico has been one of world's leading oil producers. From 1973 to 1982 (i.e., from the first oil shock to the Mexican default marking the onset of the Third World debt crisis) oil production increased at 50% a year and accounted for about 75% of exports. By 2002, manufacturers had long ago overtaken oil as the main economic driver: oil made up only about 10% of exports, while 80% were manufactured products, half from the maquiladora sector of assembly plants. The maquilas are plants which import semifinished goods from the United States, taking advantage both of low Mexican wages and of laws that allow the goods to be imported, processed, and re-exported free of tariff charges. The maquiladoras, however, were also in decline by 2005 due to competition from lower-wage countries and the progressive lowering of all Mexico's tariffs under the NAFTA agreement. While some moved to the southern states of Mexico, where wages were lower, others moved their operations abroad.

Led by the oil boom, from 1978 to 1981 the Mexican GDP increased by an annual rate of 8% and the government embarked on an ambitious public spending program, financed to a great extent by external borrowing in the petro-dollar market. The ambitions slammed up against a wall of falling oil prices, world-wide recession, and increasingly tight money in 1981. By August 1982, Mexico found itself unable to service its spiraling external debt. The annual inflation rate, which had hovered around 30% during 197981, reached almost 100% in 1982.

In December 1987, the Pact for Stability and Economic Growth (PECE) was implemented. The PECE was a series of price and wage restraint agreements between government, labor, and the private sector, which combined austere fiscal and monetary restraints with price/wage controls and freer trade possibilities. The PECE helped curb inflation to 51.6% in 1988 without incurring a recession. Gradual recovery saw the inflation rate fall to 20% in 1991, 11.9% in 1992, and to around 10% in 1993.

As the price of debt rescheduling and the maintenance of international credit worthiness, the government was brought to adopt a program of economic liberalization and privatization that culminated in the North American Free Trade Agreement (NAFTA). This agreement went into effect on 1 January 1994 and opened the domestic market to foreign trade by a phased elimination of trade barriers between Mexico, the United States, and Canada over the next 15 years. The same day, the Zapatista National Liberation Army (EZLN) led an uprising in Chiapas. That year, 1994, turned out to be a politically and economically tumultuous year for Mexico. First, the PRI candidate in the presidential race had been assassinated by old economic nationalists within the party. Second, a speculative boom in lending by US banks and businesses seeking new markets in Mexico generated an unsustainable run-up of external short-term debt. The Zedillo government sought to lance the debt by devaluing the peso in December. Then, following the devaluation, even more rapid withdrawal of foreign capital threatened to sink the peso further and to spread throughout Latin America and beyond.

In January 1995, the Clinton administration organized an international assistance package which provided $50 billion in loans (including $20 billion in loan guarantees from the United States). As a measure of its sincerity, the Mexican government put its oil revenues up as collateral for the loans. Also with an eye to restoring its international creditworthiness, the government only used about half of the credits made available, and paid back those it did use ahead of schedule. The Mexican GDP contracted 6.9% in 1995, but by 1996 growth expanded 4.2%. By 1997, growth had increased to 6.8%. Ironically, the depreciation of the peso aided recovery by making Mexican goods less expensive and thus more competitive on world markets, and the net effect of NAFTA has been a trade deficit with Mexico, reaching $29 billion in 2001, up $5.3 billion from 2000. Nevertheless, the promise of the Mexican market has been kept. US exports to Mexico grew from $46 billion in 1995 to $112 billion in 2000, more than double the value of US exports to the EU and making Mexico the second-largest trading partner of the United States (after Canada).

Inflation and external debt remained serious problems for the economy, threatening stability. In 1997 the government adopted the National Program for Development Finance (PRONAFIDE) which outlined the government's economic policy framework for the period 1997 to 2000. It supported further privatization and deregulation of the economy. Inflation, at 20.6% in 1997, decreased steadily to 5% (est.) in 2002. External debt as a percent of GDP fell from 37% in 1997 to 24.9% in 2002, and the external debt to exports ratio fell from 113.6% to 85.9% during the same period. However, GDP growth also moderated, to 4.9% in 1998 and 3.7% in 1999, due mainly to the spreading effects of the Asian financial crisis of 1997, the Russian debt default of 1998, and the Brazilian currency crisis of 1999. In 2000, however, as Vincente Fox was elected as the first non-PRI president in 71 years, the GDP rose a sharp 6.6%.

By 2000, Mexico had, thus, improved its macroeconomy, such that Moody's and Fitch IBCA, in March 2000 and January 2002 respectively, issued investment-grade ratings for its sovereign debt. Recovery was cut somewhat short in 2001, as Mexico imported the US recession and slowdown, which carried over into 2002. The economy contracted 0.3% in 2001, and grew at only an estimated 0.9% in 2002. In 2003 and 2004, growth picked up at respective rates of 1.4 and 4.4%. The Economist Intelligence Unit estimated real GDP growth to be 3.0% in 2005, and reported the unemployment rate to be gravitating around 3.8% in 2004 and 2005. Inflation decreased steadily from 6.4% in 2001 to 5% in 2002 and hovered between 4 and 5% from 200305. However, damage to agriculture from Hurricane Stan, which hit the southern states of Mexico in fall 2005, is likely to cause inflationary pressures. Even so, the GDP is expected to stay afloat, despite the damage to production, because of reconstruction investment estimated at $2.3 billion. The funds will likely be drawn from the extra oil revenue that resulted from heightened oil prices.

INCOME

The US Central Intelligence Agency (CIA) reports that in 2005 Mexico's gross domestic product (GDP) was estimated at $1.1 trillion. The CIA defines GDP as the value of all final goods and services produced within a nation in a given year and computed on the basis of purchasing power parity (PPP) rather than value as measured on the basis of the rate of exchange based on current dollars. The per capita GDP was estimated at $10,000. The annual growth rate of GDP was estimated at 3%. The average inflation rate in 2005 was 4.1%. It was estimated that agriculture accounted for 4% of GDP, industry 26.5%, and services 69.5%.

According to the World Bank, in 2003 remittances from citizens working abroad totaled $14.595 billion or about $143 per capita and accounted for approximately 2.3% of GDP. Foreign aid receipts amounted to $103 million or about $1 per capita and accounted for approximately 0.0% of the gross national income (GNI).

The World Bank reports that in 2003 household consumption in Mexico totaled $433.06 billion or about $4,246 per capita based on a GDP of $639.1 billion, measured in current dollars rather than PPP. Household consumption includes expenditures of individuals, households, and nongovernmental organizations on goods and services, excluding purchases of dwellings. It was estimated that for the period 1990 to 2003 household consumption grew at an average annual rate of 2.8%. In 2001 it was estimated that approximately 30% of household consumption was spent on food, 4% on fuel, 2% on health care, and 7% on education. It was estimated that in 2003 about 40% of the population had incomes below the poverty line.

LABOR

The labor force in Mexico numbered an estimated 37.38 million in 2005. As of 2003, the services sector accounted for 58% of those employed, with industry accounting for 24%, and agriculture the remaining 18%. Underemployment, Mexico's major labor problem, affected mainly those engaged in agriculture. Although unemployment was put at an estimated 3.6% in 2005, around 25% of the country's workforce may be classified as underemployed.

As of 2005, approximately 25% of the labor force in the formal economy was unionized. As of that same year, Mexican workers were free to organize and join unions, bargain collectively, and engage in strikes. However, independent unions must register with the government and strikes must be preceded with advance notice and some brief mediation.

Under the federal labor law, every employee is entitled to one paid day of rest after every six days of work, seven paid holidays, and at least six days of vacation after a year of employment and at least eight days after two years. An annual bonus equal to 15 days' pay is required to be paid to all employees before Christmas, and vacation pay carries a 25% premium. The workday is generally eight hours, six days per week. Double or triple pay must be paid for overtime, depending on how many overtime hours are accumulated. Compulsory overtime is prohibited. Children as young as 14 may work, but with severe restrictions as to the conditions and hours of employment, and only with parental consent. Child labor provisions are well-enforced among medium and large companies, but many children work in smaller companies, in agriculture, or in the informal economy, usually in family enterprises, where enforcement is spotty and in the informal sector, almost nonexistent.

The national minimum wage rate varies by geographical area. In 2005, the minimum wage in southeast Veracruz State was $4.23 per day, while in Mexico City, it was $4.36 per day. These rates do not provide a worker and family with a decent standard of living, and only a small portion of workers in the formal economy earn the minimum wage. Many workers earn less, while those employed by prosperous industrial enterprises can earn three to four times more. Employers are required by law to observe health and safety regulations.

AGRICULTURE

Agriculture's contribution to GDP fell from 15.1% in 1960 to 10.7% in 1970 and 4% in 2003yet agriculture employs about 22% of the labor force. Only about 14% of Mexico's total land area is suitable for cultivation, and only 6% is cultivated with permanent crops; over 6.3 million hectares (15.6 million acres) are irrigated.

In 1960, Mexico became self-sufficient for the first time in corn; it continues to be self-sufficient in beans, rice, sugar, and most fruits and vegetables, and fluctuates between being either a net importer or self-sufficient with wheat and corn. During the late 1960s, Mexico almost tripled the investment allocated for agriculture. The government continues to protect agriculture and to ensure domestic consumption through import and export duties and controls. The government supports the prices of corn, wheat, beans, and fresh eggs and then sells these and other farm products at minimal prices through retail stores operated by the National Corporation for Public Subsidies. In 1977, the government introduced a new program called the Mexican Alimentary System, seeking to foster food production through subsidized credit, cheap raw materials, guaranteed prices, and crop insurance. Because of a record harvest in 1981, the agricultural sector grew by 6% overall. The program was terminated in December 1982 because of what the government called its limited contribution to rural welfare and incomes. In response to increasing pressure from Mexican producers to protect agriculture, in 2002 the government announced a series of measures to make Mexican agriculture more competitive.

In 2004, the principal crops' production totals (in tons) were as follows: sugarcane, 45,126,000; corn, 20,000,000; sorghum, 6,300,000; wheat, 2,500,000; dry beans, 1,400,000; soybeans, 75,700; rice, 191,500; and barley, 1,109,000. Principal exports are coffee, cotton, fresh fruit, sugar, tobacco, and tomatoes. In 2004, the value of agricultural exports amounted to $9,879 million, and agricultural imports totaled $13,439 million.

At the time of the Mexican Revolution, an estimated 830 landowners held 97% of the land. The principles of land reform were incorporated into Article 27 of the constitution of 1917, which provided for division of large landholdings into small farms, communally owned by villages, known as ejidos (one individual may only own 100 hectares/247 acres of irrigated land). Much of the arable land has been expropriated for the establishment of ejidos. The Agrarian Reform Law of April 1972 formally recognizes two types of landholdings, private and ejidal (in the form of lifetime land grants, which cannot be disposed of by sale or transfer). The proportion of ejidal-owned land rose from 7.5% in 1930 to 26.3% in 1960 and 47% in 1970. By 1986, 61.1% of the farm population belonged to the ejidal system, but the system yielded only about 33% of total agricultural output, and an estimated four million peasants remained landless. Beginning in the late 1970s, the government sought to group together ejidal holdings into larger collectives to increase production.

ANIMAL HUSBANDRY

More than one-third of the total land area is suitable for pasture. Livestock produced in the central, southern, and southeastern states are mostly native breeds of general-purpose cattle; in the northern and northwestern states, Herefords and other improved breeds are raised for export, mainly to the United States.

In 2005, the livestock population was estimated at 31.5 million head of cattle, 14.6 million hogs, 9 million goats, 6.8 million sheep, 6.26 million horses (third in the world), 3.26 million donkeys, 3.28 million mules, and 425 million chickens. Output of livestock products in 2005 included 9,873,000 tons of cows' milk, 154,000 tons of goats' milk, 1,543,000 tons of beef and veal, 2,225,000 tons of poultry meat, 1,058,000 tons of pork, and 1,906,000 tons of eggs. In 1996, cattle inventories declined due to lower birth rates of calves, high slaughter rates, and increased exports. One of the worst droughts in decades in northern Mexico (combined with unfavorable weather in southern Mexico) was also responsible for the decline in livestock inventories.

FISHING

Mexico's principal commercial catches are shrimp, sardines, bass, pike, abalone, Spanish mackerel, and red snapper. Coastal fishing is important. The 2003 catch was 1,553,925 tons. The leading species caught by volume that year were California pilchard, 620,000 tons; yellowfin tuna, 165,767 tons; jumbo flying squid, 100,000 tons; and tilapia, 61,771 tons.

The fishing industry is largely handled by cooperative societies, which are granted monopolies on the most valuable species of fish. Most fish processed in Mexico's canneries are consumed domestically. Ensenada, in Baja California, is Mexico's most important fisheries center. It produces most of the canned fish and virtually all of Mexico's abalone and spiny lobster exports. Mexico's first fisheries college, the Higher Institute of Marine Sciences, is located in Ensenada. In 2003, Mexico's exports of fish products were valued at over $634.5 million.

FORESTRY

About 84.57 million hectares (209 million acres) are classified as forestland, 60% tropical and subtropical forests, and 40% temperate and cold climate forests. Palms are found at elevations up to 500 m (1,600 ft), while mahogany, cedar, primavera, and sapote are found from 5001,000 m (1,6003,300 ft). Stands of oak, copal, and pine grow from 1,0001,500 m (3,3004,900 ft), and conifers predominate in higher elevations. Mexico has 72 species of pine, more than any other country; pine accounts for over 80% of annual forestry production. About 90% of Mexico's forestry production comes from temperate forests, which are mainly found in the states of Chihuahua, Durango, Jalisco, Michoacán, Oaxaca, Chiapas, and Guerrero. Tropical forests account for only 10% of forestry production, and exist in the states of Chiapas, Quintana Roo, Yucatan, Campeche, Tabasco, and Oaxaca.

Mexico's forestry policy is designed to protect and renew these resources, so that forests may fulfill their soil-protection functions and timber reserves may be exploited rationally and productively. Only about 30% of all forests are exploited, mostly in Chihuahua, Durango, and Michoacán. Timber is often located in mountainous regions with rough terrain and few all-season roads. As a result, wood production costs are 3540% higher than the world average. Moreover, most roundwood comes from ejido (communally owned) forests; this system has greatly inhibited the development of an integrated forest industry. Mexico's ability to supply its own wood products needs are severely restricted by the limited timber available. Roundwood production in 2004 was estimated at 45.7 million cu m (1.6 billion cu ft) by the FAO; forestry imports exceeded exports by $2.2 billion. Over 90% of the hardwood demand is for the manufacture of furniture.

There are also many other useful products found in Mexico's forests other than wood. Annual forestry production also includes an estimated 100,000 tons of resins, fibers, oils, waxes, and gums. The indigenous peoples living in Mexico's rain forests are estimated to utilize up to 1,500 species of tropical plants to manufacture 3,000 different products such as medicines, construction and domestic materials, dyes, and poisons. Mexico's National Autonomous University estimated the rate of annual forest loss during 19762000 was 0.25% for temperate forests, 0.76% for tropical forests, and 0.33% for semiarid forests, for a total average annual loss of around 545,000 hectares (1,347,000 acres).

MINING

Mexico's globally significant mineral sector in 2003 was dominated by hydrocarbons. However, the country ranked first in the production of bismuth (with around 24% of the world's refined total), and was the world's second-largest producer of silver and celestite (strontium mineral; 35% of world output);. The country was also a major supplier of cadmium, cement, copper, fluorspar, gold, gypsum, manganese ore (metal content), molybdenum, salt, steel, sulfur, and mine zinc. Mexico is the second-largest producer of steel in Latin America.

The total value of nonfuel minerals produced was $4.61 billion in 2003, slightly under 2002's revised total of $4.68 billion. Metals contributed 45% of the total ($2.06 billion), while industrial minerals accounted for $2.55 billion or 55%. Of the latter, sand and gravel was the highest value commodity (excluding natural gas and oil) at $842.5 million. Among metals, copper production in 2003 was first, accounting for $578 million. Total exports in 2003 were valued at $164.9 billion, with nonfuel minerals accounting for $3.1 billion. Metal exports totaled $2.7 billion. About 80% of Mexico's mineral exports went to the United States in 2003.

Silver output in 2003 was 2,568,877 kg (metal content of ore). Peñoles mined 59% of Mexico's silver. Its Fresnillo/Proaño mine, in Zacatecas, produced over 995,000 kg. Peñoles also produced almost all of the country's refined silver, and mined 58% of its lead and 57% of its zinc. Grupo Mexico mined 33% of Mexico's zinc in 2003. In 2003, Mexico produced 20,406 kg of mined gold. As with silver, Peñoles was Mexico's largest gold producer with 52% of the total. Copper output in 2003 (by cementation, concentration, and leaching) was 355,653 metric tons. Mined bismuth output that same year totaled 1,064 metric tons. Celestite output in 2003 totaled 130,329 metric tons, while fluorspar (acid grade and metallurgical grade), production 756,000 tons. Iron ore (gross weight) output in 2003 totaled 11.265 million tons, while cadmium mine production in that year, totaled 1,616 metric tons. Barite production in 2003 totaled 287,451 metric tons, while lead mine output that same year came to 139,348 metric tons. In 2003, Mexico also produced antimony; mercury; tin; natural abrasives (comprising mostly pumice stone and emery, a granular, impure variety of corundum); clays (bentonite, common clay, fuller's earth, and kaolin); diatomite; feldspar; hydrated lime and quicklime; magnesite and magnesia; mica; nitrogen; perlite; phosphate rock; sodium compounds; stone, sand, and gravel (including common calcite, dolomite, limestone, marble, quartzite, and glass sand [silica]); talc; and wollastonite. No tungsten was produced from 2000 through 2003. Although vermiculite was not produced from 1998 through 2001, 300 metric tons was produced in 2002 and 312 metric tons in 2003.

Mexico had 15% of the world's graphite reserves (3.1 million tons) and 13% of silver reserves (37,000 tons). The country also ranked among the highest in reserves of cadmium (35,000 tons), mercury (5,000 tons), and selenium (4,000 tons). Lead reserves totaled 1 million tons; zinc reserves, 6 million tons; molybdenum, 90,000 tons; copper, 14 million tons; and manganese, 4 million tons. Sulfur was found in the salt domes of the Isthmus of Tehuantepecreserves of all forms amounted to 75 million tons. An area in Baja California potentially rich in gold, silver, copper, lead, and zinc was discovered by a sensor on the US space shuttle Columbia in 1981. Northern Mexico dominated the production of minerals. Metallic deposits were mostly in the Sierra Madre ranges; copper, gold, and manganese were mined mainly in the northwest (Sonora produced more than 80% of the nation's copper and received three-quarters of foreign investment); lead, zinc, and silver in central Mexico (Zacatecas was the principal state for silver, and Chihuahua was the leader in lead and zinc); and coal and petroleum in the east. Employment in the mineral sector totaled 220,100 in 2000, including 58,400 in metal mining, 57,200 in iron and steel, and 46,500 in nonmetallic minerals.

Under the constitution, minerals were part of the national patrimony. Nearly all formerly state-owned mines had been privatized by 1997. Although low prices for base metals (except copper) and precious metals have hurt the industry, the North American Free Trade Agreement (NAFTA) was expected to have a significant role in attracting foreign investment to the mineral sector. Amendments in 1996 to the 1992 Mining Law removed many of the restrictions regarding the participation of private and foreign companies, permitting direct investment with up to 100% ownership of equity in exploration works and activities, and allowing up to 100% foreign participation in production. Further revisions in 1999 were geared to increase participation of the private sector, and competitiveness of mining companies in the country.

ENERGY AND POWER

Mexico, according to most analysts, has the third-highest proven reserves of crude oil in the Western Hemisphere, following Venezuela and the United States. The country also contains deposits of natural gas that gives it the sixth-largest proven reserves of natural gas in the Western Hemisphere. Mexico also has recoverable deposits of coal.

As of 1 January 2004, Mexico is estimated to have proven oil reserves of 15.7 billion barrels, with production in 2003 estimated at 3.8 million barrels per day, of which 3.37 million barrels per day was crude oil. Domestic consumption of oil in 2003 was estimated at 2.02 million barrels per day. Net oil exports that same year were estimated at 1.78 million barrels per day. Crude oil refining capacity, as of 1 January 2004, was estimated at 1.73 million barrels per day. Although the government restricts exploration and exploitation of petroleum deposits, some foreign and private exploratory drilling has been permitted. Oil exploration and production is managed by state-owned Petroleos Mexicanos (Pemex), which was split into four subsidiaries in 1992. While Pemex maintains exclusive rights to oil output and exploration in Mexico, the nation's hydrocarbon reserves are owned by Mexico, not Pemex.

According to the Oil and Gas Journal, Mexico's proven reserves of natural gas were estimated, as of 1 January 2004, to be 15 trillion cu ft. In 2002, natural gas output was estimated at 1.33 trillion cu ft, mostly from offshore sources. However, Mexico's demand for natural gas outstripped production in 2002. Net imports of natural gas that year came to 0.27 trillion cu ft.

Mexico, in 2001, had an estimated 1.3 billion short tons of recoverable coal reserves. In 2002, Mexico's production of coal came to an estimated 12.1 million short tons, while demand that year came to an estimated 13.8 million short tons, making Mexico a net importer of coal, which amounted to 1.7 million short tons.

Total electric power generating capacity came to an estimated 42.3 GW, as of 2002. The amount of electricity produced in 2002 was an estimated 198.6 billion kWh, of which 81% came from conventional thermal plants, and 12% from hydroelectric sources. Nuclear generating output came to 4.5%, with 2.5% from other, alternative sources. The possibilities for geothermal electrical production are extensive, with over 100 thermal springs available for exploitation.

INDUSTRY

Mexico has one of the best-developed manufacturing sectors in Latin America. The manufacturing sector surpassed agriculture's contribution to GDP as far back as the early 1950s. Government support of industry, via import substitution industrialization, resulted in sharp increases to satisfy increased domestic demand for manufacturing output from the 1950s through the 1970s.

In the 1980s, the Mexican government retreated from its position of dominance over the economy, and the private sector was given an expanded role. Manufacturing output increased on average by 2.3% per year during the 1980s and by 3.9% annually during 198898. In 1998, manufacturing contributed an estimated 22.1% to GDP, and had a growth rate of 7.4%. In 2004, industry as a whole accounted for about 27% of GDP and the industrial production growth rate was estimated to be 3.8%.

Major industrial centers are Mexico City, Guadelajara, Monterrey, Ciduad Juarez, and Tijuana. Mexico City is an attractive venue for manufacturing due to its skilled work force, low distribution costs, large consumer market, and closeness to political decision makers and the nexus of Mexico's communications system. The principal manufacturing industries include food and beverages, tobacco, chemicals, iron and steel, petroleum, textiles, clothing, and motor vehicles, consumer durables, and tourism. Other industries include footwear, metalworking, furniture, and other wood products.

Manufacturing has been focused around the reexport processing industry, carried out by maquiladoras that have traditionally been located near the US border and owned by a foreign corporation, but have recently moved operations southward to take advantage of lower production costs. The maquiladoras contract to assemble or process imported goods brought in from the United States and then reexport them duty free. In 2002, there were some 3,200 maquiladora factories. Baja had the most export industries in 2001, at over 1,300; other leading states included Sonora, and Tijuana, which hosts the majority of electronic-related assembly plants. However, the maquiladora industry was in crisis in 2003, with Mexico losing nearly 600 maquiladoras in 200102, mostly in electronics and apparel. During that period, 250,000 jobs were lost, which amounted to 15% of the maquila workforce. China was Mexico's chief rival in the industry. (China's hourly wage is 40 US cents, compared to approximately $1.20 in Mexico, making it hard for Mexico to compete on the world market for reexports.) As of 2005, this continued to be a concern for the Mexican economy.

The construction sector has great potential, as major improvements in basic infrastructureincluding roads, highways, railways, ports, and the airport networkare carried out.

SCIENCE AND TECHNOLOGY

The National Academy of Science, founded in 1884, is the principal scientific organization. Among Mexico's 36 scientific and technological learned societies and 26 scientific research institutes, the natural sciences and medicine predominate. Especially well known is the International Maize and Wheat Improvement Center, founded in Mexico City in 1966; its director, Norman Ernest Borlaug, received the Nobel Peace Prize in 1970 for his work in advancing the "green revolution." More than 60 universities and colleges in Mexico offer courses in basic and applied sciences. In 198797, science and engineering students accounted for 32% of college and university enrollments. In 2002, of all bachelor's degrees awarded, 23.6% were in the sciences (natural, mathematics and computers, engineering).

The primary science and technology policymaking body is the National Council for Science and Technology, a decentralized public body created in 1970 composed of researchers, scientists, academicians, and government officials. They formulate, study, evaluate, and execute national science and technology policies. In 1989, the Consultative Council on Sciences was created to advise directly the President of Mexico on science and technology. In 2002, Mexico's expenditures on research and development (R&D) totaled $3,859.637 billion, or 0.43% of GDP. Of that amount, 61% came from government sources, while 30.6% came from the business sector. Higher education accounted for 7.1%, while nonprofit institutions and foreign sources accounted for 0.3% and 1%, respectively. In that same year, Mexico had 274 researchers and 98 technicians that were engaged in R&D per million people. High technology exports in 2002 totaled $28.939 billion or 21% of manufactured exports.

DOMESTIC TRADE

Mexico City is the commercial hub of the country and is the principal distribution point for all types of commodities. Other large cities, such as Guadalajara, Monterrey, and Puebla, serve as distribution points for their respective regions. Regional marketing is dominated by the open market, with its small stalls or shops, where business is transacted on an individual bargaining basis. There are also chain stores, supermarkets, department stores (some selling by mail), and a government-operated chain of more than 2,000 discount-priced food and clothing stores.

Although most sales are for cash, the use of consumer credit is increasingly extensive, especially for automobiles, furniture, household appliances, and other expensive items. A 1015% value-added tax applies to most imported products. Products are advertised through newspapers, radio, television, outdoor signs, and motion picture shorts and slides.

In 1999, the federal government mandated that businesses should keep operational hours between 8 am and 6 pm. However, most establishments continue to keep traditional work and operation hours, which can vary by region. These traditional hours are from 9 or 9:30 am to 7 pm, Monday through Friday, with one or two hours for lunch. Some offices in Mexico City have kept hours from about 10 am to 9 pm, with a two-hour lunch. Banks are open from 9 am to 1:30 pm.

FOREIGN TRADE

Mexico is one of the most trade-dependent countries in the world, and is especially connected to the United States, which buys about 88% of its exports, which include electronics, motor vehicle parts, and chemicals. Since the start of NAFTA in 1994, Mexico has increased its trade with the United States and Canada three-fold. It has also been a member of free trade agreements with Guatemala, Honduras, El Salvador, and the European Free Trade Area since 2001. More than 90% of Mexico's trade, then, is under free trade agreements. For this reason, Mexico participates actively in the World Trade Organization (WTO), and hosted the WTO Ministerial Meeting in Cancun in September 2003.

Not including exports from the maquiladoras, some of the most important general export commodities from Mexico are crude oil and automobiles. Mexico also exports 9.5% of the world's vegetables. The main destinations of Mexico's exports in 2004 were the United States (87.5%), Canada (1.8%), Japan (1.1%), and Spain (1.0%).

The main origins of Mexico's imports in 2004 were the United States (56.3%), China (3.8%), Germany (3.6%), and South Korea (3.0%).

BALANCE OF PAYMENTS

Mexico's balance of payments, in deficit throughout much of the 1960s, turned favorable in the 1970s, as inflows of foreign funds rose fast enough to offset the worsening visible trade balance. However, during the 1980s a steep rise in imports due to trade liberalization led to a growing imbalance. Mexico's external position had so deteriorated by 1986 that the IMF and World Bank coordinated a financial rescue package of $12 billion and commercial banks agreed to reschedule $44 billion in foreign debt; an innovative feature of the agreement was that repayment was effectively tied to Mexico's oil export earnings. Mexico began running a current account deficit in 1988, that remained through the 1990s. Following the 1994 devaluation of the peso, international lenders provided $40 billion in economic aid, half from the United States. This influx of capital resulted in bringing the current account deficit to less than 1% of GDP in 1995, from at least 7% in 1994.

The International Monetary Fund (IMF) reported that in 2001 Mexico had exports of goods totaling $158.4 billion and imports totaling $168.4 million. The services credit totaled $12.7 billion and debit $17.2 billion.

The US Central Intelligence Agency (CIA) reported that in 2004 the purchasing power parity of Mexico's exports was $184 billion while imports totaled $90 billion resulting in a trade deficit of $94 billion. The current account balance was estimated at -$4.113 billion. Banco de Mexico, however, reported the current account deficit to be -$7.4 billion and projected the deficit would continue, approximating -$9.0 billion in 2005.

BANKING AND SECURITIES

The Bank of Mexico (established 1925), in which the government owns 51% of the capital stock, is also the central bank and bank of issue. Together with the National Banking and Insurance Commission and the Secretariat of Finance, it supervises commercial, savings, trust, mortgage, capitalization, and investment institutions. National institutions for economic development extend agricultural and long-term industrial credit and finance and develop public works, international trade, cooperatives, and the motion picture industry; they also operate savings accounts. The National Financing Agency (founded in 1934) acts as a financing and

Country Exports Imports Balance
World 165,394.6 171,290.8 -5,896.2
United States 147,027.5 106,081.8 40,945.7
Canada 2,835.0 4,120.8 -1,285.8
Germany 1,753.2 6,274.9 -4,521.7
Spain 1,464.8 2,288.3 -823.5
Aruba 765.6 765.6
Switzerland-Liechtenstein 714.2 839.2 -125.0
Japan 607.0 7,622.8 -7,015.8
Netherlands 596.1 555.7 40.4
United Kingdom 560.7 1,242.3 -681.6
Guatemala 536.2 536.2
() data not available or not significant.
Current Account -9,247.0
   Balance on goods -5,624.0
     Imports -170,546.0
     Exports 164,922.0
   Balance on services -5,521.0
   Balance on income -11,814.0
   Current transfers 13,712.0
Capital Account
Financial Account 17,683.0
   Direct investment abroad -1,390.0
   Direct investment in Mexico 10,784.0
   Portfolio investment assets 91.0
   Portfolio investment liabilities 3,864.0
   Financial derivatives
   Other investment assets 8,266.0
   Other investment liabilities -3,931.0
Net Errors and Omissions 1,381.0
Reserves and Related Items -9,817.0
() data not available or not significant.

investing corporation; it also regulates the Mexican stock market and long-term credits.

There are a number of state development banks, including Nacional Financiera (Nafin, mainly for small and medium-sized businesses), Banco Nacional de Comercio Exterior (Bancomext, foreign trade), Banco Nacional de Obras y Servicios Públicos (Banobras, public works and services), Financiera Azucarera (sugar industry), Banco Nacional de Comercio Interior, and Banco Nacional de Crédito Rural. Nafin and Bancomext are by far the most important.

In September 1982, in order to stop the flight of capital, the government nationalized all 57 private banks; their combined assets were estimated at $48.7 billion. After the inauguration of President de la Madrid in December 1982, it was announced that 34% of the shares of the nationalized banks would be sold to bank workers and users and to federal, state, and municipal agencies. No single shareholder would be allowed to purchase more than 1% of the stock, and the federal government would retain a 66% controlling interest. The government had consolidated the commercial banking system into 19 financial institutions by the end of 1986. In November 1986 the government introduced a plan that would privatize 18 of Mexico's 19 state owned commercial banks. The sale of the banks began in 1987. In 1990 the government began allowing foreigners to buy up to 30% of the state's banks. By July 1992 the banking system was completely private. The only foreign bank permitted to operate within Mexico as of 1993 was Citibank; another 100 foreign banks had representatives in Mexico, however.

The 1990s brought fundamental change to the financial sector. Apart from liberalization of interest rates and credit terms and the elimination of obligatory lending to the public sector, there was the creation of new financial instruments and institutions. At the end of 1994, there were around 50 commercial banks in operation compared with just 19 two years earlier. The newly privatized commercial banks had problems almost from the outset. The principal cause was poor asset quality which manifested itself in an increasingly serious burden of nonperforming loans.

Faced with the prospect of a wholesale banking collapse, the government came up with a succession of different measures to deal with the problem of bad debts. There had been a scheme to enable bank loans to be rescheduled using index-linked Unidades de Inversión (UDIs) and a program of support for bank debtors (Apoyo a Deudores, ADE) designed to help as many as eight million people reschedule debts of up to $26,000. In May 1996, the government announced a further scheme to help mortgage debtors under which it was to assume 30% of monthly payments due during the year, the proportion falling progressively to 5% over 10 years.

Apart from providing relief for debtors, the government also set up a program to enable banks to meet capital and loan loss provisions (Programa Temporal de Capitalización Temporal ), as well as a fund (Fondo Bancario de Protección de Ahorro-Fobaproa ) to take over banks' bad debts in exchange for new capital injections by shareholders. Nevertheless, it has had to step in and take control of a number of institutions. The reserve package cost the government a considerable sum. However, it limited the damage by selling off banks in its control, mainly to foreign investors. Foreign investors also helped to capitalize banks which were in private hands. By 1999, there were $61 billion of unpaid debts that the Mexican government had bought from banks in order to keep them from collapsing, adding to the public debt. These bank loans equaled 20% of GDP in 1999.

In mid-March 1997, after two years of preparation, the government introduced measures to curb money laundering. Anywhere between $4 billion and $30 billion of drug money is laundered in Mexico every year. Starting in 1998, banks, brokerages, and large foreign exchange houses had to report all cash transactions involving $10,000 or more to the central bank. The International Monetary Fund reports that in 2001, currency and demand depositsan aggregate commonly known as M1were equal to $56.5 billion. In that same year, M2an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual fundswas $138.3 billion. The money market rate, the rate at which financial institutions lend to one another in the short term, was 12.89%.

The National Securities Commission (founded in 1946) supervises stock transactions. The Stock Exchange of Mexico (Bolsa Mexicana de Valores), the largest stock exchange in Latin America, was organized in its present form in 1933. It lists the stocks of the most important industrial companies, as well as a few mining stocks. Two smaller exchanges at Monterrey and Guadalajara were absorbed in 1976 by the Mexico City exchange. Trading on the exchange increased tenfold between 1976 and 1981, but dropped thereafter with the prolonged recession. It recovered to its 1979 level by 1986 and rose 124% in 1987 despite a spectacular crash in October and November of that year tied to the Wall Street's crash. The greatest part of the trading is in fixed-interest, high-yield bonds and bank deposit paper. Under new rules, which came into force in November 1989, foreigners are allowed to purchase almost any stock through a "neutral" trust, although as of 1997 they still did not have voting rights. In 1992, the market behaved erratically, largely because of sensitivity to the political and economic situation in the United States and uncertainty about NAFTA.

In 1996, the recovery in the stock market strengthened as the economy began to pull out of recession, inflation and interest rates fell, and the currency held steady. As confidence grew, so foreign investment flowed back into the market. By mid-year, the total value of foreign investment in the stock exchange was $33.8 billion compared with $27.8 billion at the end of 1995, $34.4 billion at the end of 1994, and $54.6 billion at the end of 1993. As of 2004, a total of 152 companies were listed on the Stock Exchange of Mexico, which had a market capitalization $171.940 billion. In 2004, the IPC Index rose 46.9% from the previous year to 12,917.9.

INSURANCE

Since 1935, all life, fire, marine, automobile, agriculture, accident and health, and other insurance companies have been Mexican operated. Insurance companies must be authorized by the National Banking and Insurance Commission. In recent years, regulation has changed from rates and forms to solvency requirements. The effect of this change has been to increase product and price competition to the advantage of the consumer. The Mexican market has been divided into general and life insurers (including composites) and surety companies for purposes of regulation and government oversight. At year-end 1995, there were approximately 55 insurers, including three mutuals, two reinsurers, and two government companies. In addition, there were approximately 20 surety organizations with a total premium volume exceeding $115 million. Government companies provide the compulsory workers' compensation insurance, which is a part of the social security scheme.

The Mexican insurance market is characterized by a relatively small number of insurers, with the top five insurers enjoying 70% of the market in terms of premiums. Thereafter, the size of insurers drops very rapidly. During 1996, two of the top five insurance organizations were expected to complete a merger, with the resulting company having 30% of the 1995 market. With the liberalization of the insurance market, a number of foreign insurance organizations have established or strengthened their presence in Mexico. In 2003, the value of direct insurance premiums written in Mexico totaled $10.920 billion, of which nonlife premiums accounted for $6.690 billion. As of 2003, Mexico's top nonlife insurer was ING Comercial America, which had gross written nonlife premiums (includes personal accident; figures adjusted for inflation) of $1,481.1 million, while the leading life insurer, Metlife Mexico, had gross written life insurance premiums of $1,598.1 million in that same year. Market penetration when compared to North America and Europe, is especially low for life insurance products.

Employee benefits (Social Security) are compulsory.

PUBLIC FINANCE

Major sources of revenue are income taxes, a VAT, and public enterprise revenues. Among regular government departments, education receives the largest budget allocation, but outlays for debt service, subsidies to federal enterprises, and capital expenditures for highways, irrigation, and hydroelectric projects have exceeded regular departmental expenditures in recent years. The publicsector deficit usually increases sharply in the last year of a presidential term as the outgoing administration strives to complete its public works program. During the 1960s, government revenues rose at a faster rate than GDP, with revenues from income taxes (including surcharges) increasing by 170% in the 196069 period.

Revenue and Grants 810,620 100.0%
  Tax revenue 640,777 79.0%
  Social contributions 84,931 10.5%
  Grants
  Other revenue 84,912 10.5%
Expenditures 875,775 100.0%
  General public services 335,966 38.4%
  Defense 26,586 3.0%
  Public order and safety 23,832 2.7%
  Economic affairs 71,025 8.1%
  Environmental protection
  Housing and community amenities 60,633 6.9%
  Health 43,387 5.0%
  Recreational, culture, and religion 4,885 0.6%
  Education 216,548 24.7%
  Social protection 176,175 20.1%
() data not available or not significant.

Budgets in the 1970s and early and mid-1980s continued to show current-account "surpluses," or minimal apparent deficits; the fact that borrowings and transfers are built into the budget structure masked the true magnitude of annual deficits. In the late 1970s and the early 1980s, real budget deficits increased substantially, reaching nearly 18% of the GDP by 1982. By slashing public spending, the government was able to bring the deficit down to 8.9% of the GDP in 1983 and 7.1% in 1984, but the collapse of the world oil price sent it up to 16.3% in 1986. By the early 1990s, however, public finances were strengthening, and a surplus was recorded in 1992, equivalent to about 1.5% of GDP. Public revenues policy in 1992 sought to widen the tax base and simplify and enforce tax administration. At the same time, public expenditures have been reoriented to provide basic infrastructure and services. In 1997 and 1998 there was a current account deficit equaling 0.70% and 1.3% respectively.

The US Central Intelligence Agency (CIA) estimated that in 2005 Mexico's central government took in revenues of approximately $173.2 billion and had expenditures of $175.4 billion. Revenues minus expenditures totaled approximately -$2.2 billion. Public debt in 2005 amounted to 21.2% of GDP. Total external debt was $174.3 billion.

The International Monetary Fund (IMF) reported that in 2000, the most recent year for which it had data, central government revenues in millions of pesos were 810,620 and expenditures were 875,775. The value of revenues in millions of US dollars was $85,729 and expenditures $101,425, based on a market exchange rate for 2000 of 9.4556 as reported by the IMF. Government outlays by function were as follows: general public services, 38.4%; defense, 3.0%; public order and safety, 2.7%; economic affairs, 8.1%; housing and community amenities, 6.9%; health, 5.0%; recreation, culture, and religion, 0.6%; education, 24.7%; and social protection, 20.1%.

TAXATION

The main sources of tax revenue in Mexico are the income tax, the value-added tax (VAT), and local levies on real property. The federal government also imposes excise taxes on alcohol and cigarettes, as well as production taxes on mining.

A new income tax law, effective 1 January 1987, retained the 1981 division of taxpayers into four groups: resident corporations; resident individuals; nonresident corporations and individuals taxed only on their Mexican-source income; and nonprofit organizations, which, though paying no taxes, are still required to file annual returns. The tax reforms of 2001 extended the requirements for reporting income to the Hacienda (the term for Mexico's tax agency) as a condition for maintaining various income tax exemptions on income from dividends, capital gains, gifts and inheritances.

As of 2005, Mexico imposed a corporate income tax of 30%, which generally aggregates all income categories into a single taxable income figure. However, in 2006, the standard corporate rate will be cut to 29% and to 28% for 2007 and beyond. A 1.8% tax on fixed assets is deductible from corporate income tax. Except for gains from sale of stock on the Mexican stock exchange, capital gains are taxed at the same rate as other corporate income. Dividend payments by Mexican companies to nonresidents are not subject to any withholding. Branches of the foreign companies have the same tax obligations as domestic companies. Interest income is taxed at rates of 10%, 21%, and 30%. Royalty income from patents and trademarks are subject to a withholding tax of 30%, while royalties derived from intellectual and technical assistance are subject to a 25% withholding tax. Payments made to so-called tax havens are subjected to a withholding tax of 40%.

As of 1 January 2005, Mexico had a progressive individual income tax with a top rate of 30%. Several types of deductions are available, including lump-sum standard deductions, for housing expenses, property taxes paid, etc., but the specific mix in determining taxable income differs from region to region. The 3% Substitute Tax on Salary Credits (ISCAS) introduced in 2002 was raised to 4% for 2003. Though the tax reforms of 2001 allow state governments to impose an income tax up to 3%, as of 2003 none had a state income tax. Gifts less than about $1,700 (calculated as the equivalent of three annual minimum wages) are tax-exempt as are gifts between spouse and linear descendents (although such gifts over one million pesosabout $95,000must be reported to the Hacienda to maintain the tax exemption).

The main indirect tax is Mexico's value-added tax (VAT), in effect since 1980, which has a current standard rate of 15% on most goods and services, except in border zones in which a 10% VAT applies. Medicine and food products are zero-rated. VAT-exempt goods and services include sales of animals, vegetables, and fruit for other than industrial use; sales of tractors, fertilizers, and pesticides; rentals of agricultural machinery; international freight; international air passenger service, prepaid cellular phone service, radio paging and beeper services, the sale of natural gas for car fuel, and imports and exports in Strategic Bonded Warehouse facilities. A 5% luxury tax on a rather arbitrary collection of goods (luxury cars, jet skis, salmon, golf, horseback riding, but not yachts, lobster, scuba diving or skydiving) was abolished in 2003. Though the tax reforms of 2001 give the states leeway to impose sales taxes up to 3%, none are reported to have done so as of 2005.

CUSTOMS AND DUTIES

Mexico, a member of NAFTA since 1994, also has free trade agreements with 32 countries and regions, among them the European Union, EFTA, Israel, and 10 nations in Latin America. The agreement with the European Union is roughly the same as the specifications afforded in the NAFTA treaty. Mexico has also implemented "Sectoral Promotion Programs (PROSEC)" that reduce tariffs for goods imported from countries with most-favored nation status by up to 5% on a wide range of manufacturing inputs. In doing so, Mexico has allowed East Asian products to be increasingly competitive with US or Canadian products in Mexican markets, undermining the efficacy of NAFTA.

Since mid-1985, Mexico has undertaken a major liberalization of its trade restrictions, departing from the import-substitution approach that had been followed since the 1940s. In the second half of 1985, the need for many import licenses was abolished and Mexico joined GATT in July 1986. Until June 1985, a license was required for 4,513 of the 8,077 items on the import tariff schedule. Trade protected in this manner represented 75% of total import value. By 1991, less than 2% of all imports (14% of total import value) were subject to licensing requirements, and in 1999 there were hardly any licensing requirements. Businesses may receive reductions of up to 100% on duties for certain industrial imports in Mexico's free trade zones.

Mexico gives preferential treatment to some imports from the 10 other member nations of the Latin American Integration Association. The North American Free Trade Agreement (NAFTA) entered into force on 1 January 1994. It further lowered tariffs on US and Canadian goods to 010%. Under NAFTA, tariffs were phased out in 2005, however, many US goods already enter Mexico duty-free. There is also a value-added tax (IVA) of 1015% (depending on the destination within the country) on most sales transactions. As of 2005, Mexican tariffs on cars, and light and heavy trucks originating in the United States or Canada, can enter duty-free. However, Canadian and US vehicles that do not meet the rules of origin as contained in NAFTA are subject to a 20% tariff, as are those vehicles from other countries.

FOREIGN INVESTMENT

Old federal law was aimed at attracting foreign investment without placing the nation "at the mercy of interests that are not those of Mexico and its citizens." Under the Foreign Investment Law of 1973, capital profits and dividends could be transferred to and from Mexico and the inflow of foreign funds was encouraged by allowing foreigners to make bank deposits without revealing the identity of the depositors. The current Foreign Investment Law of 1973 preceded the launch of the first phases of the implementation of the NAFTA agreement in January 1994 and opened the economy to further foreign investment. Investment in high technology and export-oriented industries is particularly welcome. About 95% of foreign investment transactions do not require official approval. The National Foreign Investment Commission rules on cases requiring government approval.

Annual foreign direct investment (FDI) in Mexico ranged from $12 billion to $14.7 billion from 1997 to 2000 and then soared to $24.7 billion in 2001. In 2002, FDI inflow fell to $13.6 billion and in the first quarter of 2003 was 2.7% below the first quarter of 2002, at $2.6 billion. Foreign investment in 2004 was valued at $24.5 billion, $17.4 billion of which was FDI (the rest was portfolio investment).

Foreign portfolio investment as indicated by the total market capitalization of companies listed on the Mexican Stock Market reached a peak in 1993 at $200.7 billion. By 2001, market capitalization had fallen to $126 billion. In 2002, Mexican securities held by US investors totaled $47.6 billion, with $26.4 billion in equity shares, $21.2 billion, in long-term debt, and about $132 million in short-term debt.

The United States is the leading source of direct foreign investment in Mexico, reaching 86.3% in 2000, up from 55% to 66% in previous years. In 2001, there were many large foreign investments in the financial services sector, including a purchase by Citigroup of majority control in Banamex for $12.5 billion. In 2002, FDI from the United States was 26.7% of the total, at $3.6 billion. The European Union and EU countries account for most of the rest. From 200405, the foreign participation in total market capitalization was approximately 44%, according to the Economist Intelligence Unit. The US Department of State reported that, from 200004, the United States spent $35,234 million out of the total FDI inflow of $83,373 million. Manufacturing and Financial received the most investment, respectively receiving $5,750 and $4,802 million in FDI.

Mexico's Foreign Investment Law identifies 704 activities, 656 of which allow 100% foreign ownership. Ten activities are reserved for the Mexican State, and five for Mexican nationals. Thirteen activities require approval by the National Foreign Investment Commission for 100% foreign ownership, and 18 activities have ceilings of 49% for foreign investment. Sectors reserved for the state, in whole or in part, include petroleum, petrochemicals, telegraphic and radio telegraphic services, radioactive materials, electric power, nuclear energy, money printing, postal service, airports, and control of ports and heliports. Sectors reserved for Mexican citizens include retail sales of gasoline, noncable radio and television services, credit unions and banks, professional and technical services, and domestic transport. Land and water within 100 km (62 mi) of Mexico's borders or 50 km (31 mi) of the coastline may not be foreign owned.

ECONOMIC DEVELOPMENT

The government encourages local industry by giving financial support, customs protection, and tax exemption to approved or new enterprises. The National Financing Agency has supported new industries by purchasing their stock and then reselling it to the public when the firm is established. The executive branch of government may set ceiling prices on foodstuffs, drugs, and other basic necessities, such as workers' rents. Modern Mexican economic policy derives in principle from the constitution of 1917, which, in Article 27, proclaims national ownership of subsoil rights, provides for expropriation of property needed for national purposes, and provides for the breaking up of large estates and the establishment of village communal landholdings (ejidos ). The property of foreign oil companies was expropriated in 1938, and production, refining, and distribution were placed under the government controlled PEMEX. The government also nationalized the railway and banking systems, owns most electric power plants, and partly owns some industrial establishments. Majority Mexican ownership was required in virtually all sectors until early 1984, when restrictions on foreign investment were relaxed somewhat.

Major development projects in the 1970s included an attempt to increase agricultural productivity, modernization of the nation's railroads, expansion of the fishing fleet, and resettlement of some 50,000 families from the northern states to the southern states Campeche, Yucatán, and Quintana Roo.

When the exploitation of huge oil deposits began in the mid-1970s, the Mexican government embarked on an expansionist economic policy, which included an ambitious public-spending program financed to a great degree by foreign borrowing. A 17-point development program announced in 1978 created about three million new jobs by 1981, but it was not fully implemented because of the drop in world oil prices and the subsequent financial crisis. The crisis reached its climax in August 1982, when the government suspended all payments of foreign debt principal and had to resort to emergency credits to avoid default.

New credits from the International Monetary Fund (IMF) were conditional upon Mexico's acceptance of an austerity program that entailed reduction of the budget deficit from 17.9% of the gross domestic product (GDP) in 1982 to 8.5% in 1983. Other austerity measures included tax increases, increases in the prices of controlled commodities, such as bread and salt, and steps to decrease tax evasion and reduce inflation. The de la Madrid administration simultaneously pursued policies to reduce the inflated value of the peso and to generate massive trade surpluses; indicative of their effectiveness were the 1983 and 1984 surpluses, over $13 billion in each year. The government, moreover, pursued rescheduling of its foreign debt, winning agreements in 1983 ($14 billion) and 1986 ($43.7 billion). In 1985 and 1986, however, the earthquake and the fall in world oil prices undermined the recovery; export revenues plunged, and inflation soared. The 1986 rescheduling was conditional upon Mexico's agreement to increase development of the export sector and encourage efficient import-substitution policies, as well as foreign investment.

Since Mexico joined GATT in 1986, trade barriers were eliminated and tariffs reduced. Privatizations since 1989 include: the telephone company, Telmex; Mexico's 18 commercial banks; the airlines, Aeromexico and Mexicana; two large copper mines, Cananea and Mexicana de Cobre; and two large steel companies, Sicartsa and AHMSA. Privatizations have produced large one-time revenues for the government, while simultaneously reducing the government's role in the economy thus garnering savings by reducing its transfers to inefficient enterprises. Furthermore, these new profit-making private sector companies have widened the tax base.

The North American Free Trade Agreement (NAFTA), ratified in 1992 and implemented in 1994, culminated several years of trade liberalization efforts begun in 1986. NAFTA's goal is the creation of a market of 360 million consumers with $6 trillion in annual output. Tariffs on most industrial and agricultural goods are to be eliminated or phased out within 15 years. NAFTA trading benefits are only given to goods produced wholly or principally in NAFTA countries. NAFTA eliminates trade barriers and investment restrictions on participating countries' autos, trucks, buses, and auto parts within 10 years. NAFTA proposed to safeguard domestic agricultural production of the dairy, egg, poultry, and sugar sectors. NAFTA opens up foreign investment possibilities in the Mexican energy sector. NAFTA has provisions for the textiles and services sectors, banking, investment, and intellectual property rights. Labor and environmental impacts are also addressed. Mexico established free trade agreements with Venezuela and Colombia as a member of the Group of Three, and with several other Central American nations. Mexico signed a free trade agreement with Chile in 1991.

The 199495 Mexican financial crisis demanded the government undertake major policies of economic management and reform. A buoyant financial market and large inflows of capital preceded the crisis. Capital inflow to Mexico between 1990 and 1994 amounted to $104 billion20% of total capital flows to developing countries during that period. Mexico's external current account deficit widened, there was a rapid growth in bank credit to the private sector, international interest rates were rising, and the country maintained an exchange rate peg. Mexico floated the peso in December 1994; the currency was attacked by speculative investors, which led to a drastic devaluation. The financial system was also very weak, and there was a massive outflow of capital from the country. After the crisis broke, the government realized major structural changes would need to be taken, and international financial support would be needed. The US government, the IMF, World Bank, and the Inter-American Development Bank provided emergency funds, to prevent the crisis from spreading to other countries. The Mexican economy began to recover in 1996.

In 1999, the IMF approved a 17-month, $4,123-million Stand-By Arrangement with Mexico to support the government's economic reform program. In 2000, Mexico repaid all of its obligations to the IMF. The country in the early 2000s was a recipient of large amounts of foreign direct investment, the largest recipient of FDI in Latin America in 2000 (22.5 billion). The Mexican economy weakened in 200102, however, marked by weak domestic demand. In 2002, the government was following an economic program (PRONAFIDE) aimed toward strengthening the country's fiscal position, enhancing competitiveness and stimulating productivity. The government was aiming for a reduction of the fiscal deficit and public debt by 2006. Although the government realized it had to maintain spending constraints, it still increased social expenditures in an effort to combat poverty. The government in 2003 was considering tax reform, opening up the telecommunications sector to more competition, and, most controversial, allowing for private investment in energy. As of 2004, the government was working to privatize port operations in order to increase trade development. At the time, Tampico and Veracruz were Mexico's primary seaports.

SOCIAL DEVELOPMENT

The social security system includes old age pensions, disability, medical, and work injury benefits. The system covers all workers, and consists of both social insurance and a private insurance scheme. Pensions are financed by contributions from employees, employers, and the government. Retirement is set at age 65, and benefits are determined by length of employment. Insurance for occupational accidents is financed by employer contributions, and provides for 100% of earnings for temporary disability, and 70% of salary for those permanently disabled. Insured workers and their families receive medical and maternity benefits. A funeral grant is provided. Child care is available to dependent children of poor women, widowers, and divorced working men.

An amendment to the 1917 constitution states that men and women are equal before the law, however in practice this was not respected. Women continue to earn less than men, and are concentrated in lower paying jobs. Women can own property and file for divorce. Domestic violence is widespread and is vastly under reported. It was estimated in 2004 that 47% of women experienced at least one incident of physical or emotional abuse. Organizations and women's groups are working to counter the view that spousal abuse is a private matter and normal behavior. Sexual tourism is a problem, especially in the resort areas of the country.

Indigenous peoples have full protection under the law, but in practice they face discrimination and experience economic hardship. Numerous nongovernmental organizations in Mexico are working to protect and promote the rights of indigenous peoples. The human rights of citizens are generally respected, although there are continued reports of extrajudicial killings, torture, illegal arrests, and arbitrary detention. Narcotics related killings have increased in recent years.

HEALTH

Mexico has made slow but measurable progress in public health. The Health Sector Reform Program, launched in 1995, has aimed at reorganizing the healthcare system to expand coverage and increase efficiency of services. In 2004 there were an estimated 171 physicians, 221 nurses, and 10 dentists per 100,000 people. Total health care expenditure was estimated at 5.3% of GDP. In 2000, 86% of the population had access to safe drinking water and 73% had adequate sanitation.

As of 2002, the crude birth rate and overall mortality rate were estimated at, respectively, 22.36 and 4.99 per 1,000 people. About 65% of the married women (ages 15 to 49) were using contraception. The infant mortality rate, which was 101.7 per 1,000 live births in 1948, was reduced to 20.91 by 2005. Average life expectancy, meanwhile, rose from 32.4 years in 1930 to 57.6 in 1965; by 2005, average life expectancy was estimated at 75.19 years. Maternal mortality was 55 per 100,000 live births.

Cholera, yellow fever, plague, and smallpox have been virtually eliminated, and typhus has been controlled. Permanent campaigns are waged against malaria, poliomyelitis, skin diseases, tuberculosis, leprosy, onchocerciasis, and serious childhood diseases. Immunization rates for children up to one year of age were as follows: tuberculosis, 99%; diphtheria, pertussis, and tetanus, 93%; polio, 94%; and measles, 84%. Major causes of death were communicable diseases, neoplasms, injuries and circulatory diseases.

Since 1995, the number of new AIDS cases reported each year has stabilized. The HIV/AIDS prevalence was 0.30 per 100 adults in 2003. As of 2004, there were approximately 160,000 people living with HIV/AIDS in the country. There were an estimated 5,000 deaths from AIDS in 2003.

HOUSING

Government agencies that have fostered the development of lowincome housing include the Fund for Housing Operations and Bank Discounts, the National Public Works and Services Bank, the Housing Credit Guarantee and Support Fund, and the Comisión Nacional de Fomento a la Vivienda (CONAFOVI). In 1974, the National Workers' Housing Fund Institute (Instituto del Fondo Nacional de la Vivienda para los TrabajadoresINFONAVIT) was created to provide housing for workers. With funds provided by employers (equal to 5% of the total salary of each worker), INFONAVIT makes direct loans to employees and provides short-term loans to finance the construction of approved multiunit projects, which are then sold to employees covered by the program.

Government efforts have fallen short of eradicating Mexico's housing shortage, which had been exacerbated by accelerated population growth in the 1980s. The government allocated us$1.93 billion in 1989 to build 250,000 lowcost housing units, and expected to receive an additional us$700 million from the World Bank to build more. The 1990 National Housing Plan predicted a shortage of 6.1 million homes, to be felt most severely in the outskirts of urban areas, including Mexico City, Guadalajara, Monterrey, and cities in the northern states.

In 2000, there were about 21,954,733 housing units; in 2004 the stock was estimated at about 24 million units. About 85% are detached homes. Most dwellings are privately owned; about 84% have running water and 78% have access to sewage services. The average household had about 4.4 members. About 50% of all new housing (about 300,000 units per year) is self-built by low-income households. However, much of this is informal housing with inadequate structure and a lack of public utilities.

EDUCATION

Except in the Federal District, where education is administered by the federal government, schools are controlled by the states. As of the 2004/05 academic year, 10 years of schooling are compulsory and free, beginning with one year of preschool at about age five. Primary school then covers six years of study. Secondary school studies generally last for three years. Secondary students may choose a general education program, a technical school program, or a vocational school program.

In 2001, about 76% of children between the ages of four and five were enrolled in some type of preschool program. Primary school enrollment in 2003 was estimated at about 99% of age-eligible students. The same year, secondary school enrollment was about 63% of age-eligible students. It is estimated that about 99% of all students complete their primary education. The student-to-teacher ratio for primary school was at about 27:1 in 2003; the ratio for secondary school was about 17:1.

Major universities include the National Autonomous University (founded in 1551), the National Polytechnic Institute, and Iberoamericana University (private), all in Mexico City, and Guadalajara University, the Autonomous University of Guadalajara, and the Autonomous University of Nuevo León. In each state there are other state and private institutions. In 2002, there were 1550 institutions of higher education nationwide; 606 were public and 944 were private. In 2003, about 22% of the tertiary age population were enrolled in some type of higher education program. The adult literacy rate for 2004 was estimated at about 90.3%, with 92% for men and 88.7% for women.

The government provides extracurricular education through cultural and motorized missions, community-development brigades, reading rooms, and special centers for workers' training, art education, social work, and primary education. As of 2003, public expenditure on education was estimated at 5.3% of GDP, or 24.3% of total government expenditures.

LIBRARIES AND MUSEUMS

The Mexican public library system has over 4,800 branches holding in total over 20 million volumes and servicing about 72 million registered library users. The National Library, now affiliated with the National University of Mexico, has about three million volumes. Other important collections include the Library of Mexico, the Library of the Secretary of the Treasury, and the Central Library of the National Autonomous University in Mexico City. In total, there are over 1,000 libraries affiliated with institutions of higher education.

The National Museum of Anthropology in Mexico City, founded in 1825, has over 600,000 anthropological, ethnological, and archaeological exhibits and a library of 300,000 volumes. Among its exhibits are the famous Aztec calendar stone and a 137-ton figure of Tlaloc, the god of rain. The National Historical Museum, attached to the National Institute of Anthropology and History, has more than 150,000 objects ranging in date from the Spanish conquest to the constitution of 1917. The National Museum of Art exhibits Mexican art from 17th century to present, while several other art museums exhibit the works of leading European artists, including the Museum of Modern Art and the Museum of Popular Art. Also in Mexico City is the Frida Kahlo Museum in the former home of Frida Kahlo and Diego Rivera, featuring the works of the former, considered to be Mexico's finest artist. (There is another museum featuring Rivera's work in Guanajuato.) Many public buildings in Guadalajara and elsewhere display murals by famous Mexican painters.

MEDIA

National and international telegraphic service is furnished by the government-owned National Telegraph Co. The government also owns and operates the international radiotelegraph and radiotelephone facilities. A privately owned telephone company provides supplemental facilities in outlying areas. The largest utility is the government-owned Telephones of Mexico. In 2003, there were an estimated 158 mainline telephones for every 1,000 people. The same year, there were approximately 291 mobile phones in use for every 1,000 people. The national microwave network, now complete, cost more than p650 million; facilities by 1968 included the central telecommunications tower in the Federal District and a land station for artificial satellite communications at Tulancingo, Hidalgo, with one of the largest antennas in the world. The network serves most of the country's larger cities.

Broadcast media is primarily under private ownership and operation. Televisa and TV Azteca are the two primary television broadcasters, accounting for about 90% of the broadcast market in 2004. The federal government owned two television stations. There were also several regional stations supported in part by the various state governments. As of 2003 there were 850 AM and 545 FM radio television stations and over 200 television stations. In 2003, there were an estimated 330 radios and 282 television sets for every 1,000 people. About 24.3 of every 1,000 people were cable subscribers. Also in 2003, there were 82 personal computers for every 1,000 people and 118 of every 1,000 people had access to the Internet. There were 634 secure Internet servers in the country in 2004.

Leading newspapers in Mexico City (with their estimated average daily circulations in 2004) include: La Prensa (275,000), El Universal (170,000), Esto (150,000), Reforma (126,000), El Universal Grafico (105,000), Ovaciones (50,000), El Financiero (40,000), Tribuna (40,000), and La Jornada (35,000). Leading newspapers in Monterrey in 2004 included El Norte (133,872), Metro (62,000), and El Porvenir (60,000). There are two major daily papers in Tampico, El Sol de Tampico (77,000 in 2004) and El Heraldo de Tampico (54,000). El Mexicano in Tijuana had a 2004 daily circulation of 48,000 (a significant decrease from 80,000 in 2002), while El Sol de Tijuana distributed 50,000 daily papers. Guadalajara has four major papers, including: El Occidental (49,400), El Informador (46,000 in 2004), El Sol de Guadalajara (NA), and Ocho Columnas (40,000). The English language paper The News is distributed out of Mexico City, reporting a circulation of 30,000 in 2004.

Freedom of the press is guaranteed by law and to a large extent exercised in practice. However, by controlling the supply of newsprint and by providing advertising, indirect subsidies, and out-right payoffs to the press, the government exerts an indirect form of press censorship.

ORGANIZATIONS

The Mexican government supervises and promotes producer and consumer cooperatives, which are exempt from profits and dividends taxes, and are given customs protection. Producer cooperatives are active in agriculture, fishing, forestry, and mining. Consumer cooperatives buy, sell, and distribute clothing, foodstuffs, and household articles.

Chambers of commerce and of industry are located in most cities, and merchants and manufacturers are required to join either or both. Headquarters for the Confederation of National Chambers of Commerce and the Confederation of Industrial Chambers are in Mexico City. The principal employers' organization is the Employers' Confederation of the Mexican Republic, which dates from 1929. There are several trade unions and associations for particular occupations; specialized unions include the Federation of Coffee Organizations, the Mexican Association of Gifts, and the Decorative Goods and Folk Art Producers. Professional associations also exist for a variety of occupations and fields.

Cultural and educational organizations include the Academia Mexicana de la Historia, Academia Mexicana de la Lengua, and Instituto Nacional de Bellas Artes. The National Academy of Sciences and the National Council for Science and Technology are major supporters of scientific research and education. There are several other associations dedicated to research and education for specific fields of medicine and particular diseases and conditions, such as the Mexican League Against Epilepsy.

National youth organizations include the University Student Council, the Scouts Association of Mexico, Girl Guides, the Conference of Political Youth Organizations in Latin America, Junior Chamber, and YMCA/YWCA. Sports associations and clubs are popular in Mexico and many national groups are affiliated with international associations, such as the World Boxing Council, which is based in Mexico City.

Environmental groups include Conservation Mexico and a national chapter of Greenpeace.

Kinal Antzetik is an organization focusing on improving the health and welfare of women, particularly those of indigenous groups, and promoting equal rights and social justice. Centro Mujeres is a similar community health organization for women. Other social action groups include the Mexican Society for Women's Rights and the Mexican Commission for the Defense and Promotion of Human Rights. Volunteer service organizations, such as the Lions Clubs and Kiwanis International, are also present. Several national service groups network through the Mexican Association of Volunteers. International organizations with chapters in Mexico include the Red Cross, Habitat for Humanity, and Amnesty International.

TOURISM, TRAVEL, AND RECREATION

Mexico's tourist attractions range from modern seaside resort areas, such as Tijuana, Acapulco, Puerto Vallarta, Punta Ixtapa/Zihuatanejo, Cozumel, and Cancún, to the Mayan ruins of Chiapas State and the Aztec monuments of the south-central regions. Mexico City, combining notable features from the Aztec, colonial, and modern periods, is itself an important tourist mecca. Veneration of the patron saints plays an important role in Mexican life, and the calendar is full of feast days (fiestas). These predominantly Roman Catholic celebrations include many ancient Amerindian rites and customs and, invariably, bands of mariachi musicians playing Mexican folk songs. Tourists from the United States and Canada are not required to have a visa for stays of up to 30 days, but must have photo identification, proof of citizenship, and a tourist card. All other visitors must have a valid passport and a visa.

Mexico was host in 1968 to the Summer Olympics and in 1970. The 1986 World Cup football (soccer) championship was also held in Mexico; the World Cup helped tourism recover from the effects of the earthquake, which kept many visitors away in 1985 and 1986. Mexico's most popular sports are baseball, soccer, jaialai, swimming, and volleyball. Bullfights are a leading spectator sport; the Mexico City arena, seating 50,000, is one of the largest in the world, and there are about 35 other arenas throughout the country.

There were 18,665,384 tourists who visited Mexico in 2003, of whom 94% came from the United States. Hotel rooms numbered 496,292 with 992,584 beds and an occupancy rate of 48%. The average length of stay that year was three nights. Tourist expenditure receipts totaled $10.1 billion.

The cost of traveling in Mexico varies considerably from city to city. According to the 2005 US Department of State estimates, daily expenses in Mexico City were $285; in Nogales, $193; in Cozumel, $230; in Cancún, $294; and in Tijuana, $187.

FAMOUS MEXICANS

The founder of Spanish Mexico was Hernán Cortés (14851547), a daring and clever Spanish conquistador. One of the great heroes in Mexican history is Guatemotzin (Cuauhtémoc, 1495?1525), the last emperor of the Aztecs, who fought the Spanish after the death of his uncle, Montezuma II (Moctezuma or Motecuhzoma, 1480?1520). Bartolomé de las Casas (14741566) and Junípero (Miguel José) Serra (171384) were Spanish-born missionaries who tried to improve the conditions of the Amerindians in the colonial period. Two heroes of the War of Independence were the liberal priests Miguel Hidalgo y Costilla (17531811) and José María Morelos y Pavón (17651815). The first 25 years of independence were dominated first by Manuel Félix Fernández, known as Guadalupe Victoria (1786?1843), and then by Antonio López de Santa Anna (17941876). Austrian-born Maximilian (Ferdinand Maximilian Josef, 183267) and Belgian-born Carlota (Marie Charlotte Amélie Augustine Victoire Clémentine Léopoldine, 18401927) were emperor and empress from 1864 to 1867, ruling on behalf of the emperor of France. Benito Juárez (180672), the great leader of the liberal revolution, attempted to introduce a program of national reform. The dictator José de la Cruz Porfirio Díaz (18301915) dominated Mexico from 1876 to 1911. He was overthrown largely through the efforts of Francisco Indalecio Madero (18731913), called the Father of the Revolution. Revolutionary generals and politicians included Venustiano Carranza (18591920) and Álvaro Obregón (18801928). Two other revolutionary leadersDoroteo Arango, known as Pancho Villa (1877?1923), and Emiliano Zapata (1879?1919)achieved almost legendary status. The foremost political leader after the revolution was Lázaro Cárdenas (18951970). Luis Echeverría Álvarez (b.1922), who held the presidency during 197076, made Mexico one of the leading countries of the developing world in international forums. Miguel de la Madrid Hurtado (b.1934) was president from 198288. Carlos Salinas de Gortari (b.1948) was president from 19881994. Ernesto Zedillo Ponce de León (b.1951) was president from 19942000. Vicente Fox Quesada (b.1942) was elected president in the 2000 election; he became the first president elected from an opposition party since Francisco Madero in 1910, breaking the 70-year reign of the PRI. The diplomat Alfonso García Robles (191191) shared the 1982 Nobel Peace Prize for his work on behalf of disarmament.

Painters Diego Rivera (18831957), José Clemente Orozco (18831949), and David Alfaro Siqueiros (18981974) are renowned for their murals. Frida Kahlo (19071954) is known for her self-portraits. The Spaniards Bernal Díaz del Castillo (1496?1590?) and Bernardino de Sahagun (1499?1590) wrote historical accounts of the Spanish conquest. Mexican-born Juan Ruiz de Alarcón y Mendoza (1580?1639) became a playwright in Spain. Juana Inés de la Cruz (165195), a nun, was a poet and proponent of women's rights. Outstanding novelists include José Joaquín Fernández de Lizardi (17761827), author of El periquillo sarniento ; Mariano Azuela (18731952), author of Los de abajo ; Martín Luis Guzmán (18871976), author of El águila y la serpiente ; and Gregorio López y Fuentes (18971966), author of El indio. Well-known contemporary authors include Augustín Yáñez (190480), Octavio Paz (19141998), Juan Rulfo (191886), and Carlos Fuentes (b.1928). Poets include Salvador Díaz Mirón (18531928), Manuel Gutiérrez Nájera (185995), and Amado Nervo (18701919). The outstanding figure in recent Mexican literary life is the diplomat, dramatist, poet, essayist, and critic Alfonso Reyes (18891959). Anthropologist Carlos Castaneda (b.Brazil, 19311998) was widely known for his studies of mysticism among the Yaqui Amerindians. Well-known Mexican composers include Manuel Ponce (18821948), Silvestre Revueltas (18991940), Carlos Chávez (18991978), and Agustín Lara (190070). Significant figures in the motion picture industry are the comedian Cantinflas (Mario Moreno, 191193), Mexican-born actor Anthony Rudolph Oaxaca Quinn (19162001), and directors Emilio Fernández (190486) and Spanish-born Luis Buñuel (190083). Oscar-nominated Salma Hayek (b.1966) is considered to be one of Latin America's most successful actresses in Hollywood; she portrayed Frida Kahlo in the 2002 film Frida, which she co-produced.

Notable Mexican sports figures include Fernando Valenzuela, (b.1960), a pitcher for the Los Angeles Dodgers who won the Cy Young Award as a rookie. "Beto" or "Bobby" Avila (19242004), second baseman for the Cleveland Indians (194958); catcher Gerónimo Gil (b.1975); pitcher Esteban Loaiza (b.1971); and pitcher Oliver Pérez (b.1981) have all made their mark in Major League Baseball.

DEPENDENCIES

Mexico has no territories or colonies.

BIBLIOGRAPHY

Blanchard, Roger D. The Future of Global Oil Production: Facts, Figures, Trends and Projections, by Region. Jefferson, N.C.: McFarland, 2005.

Calvert, Peter. A Political and Economic Dictionary of Latin America. Philadelphia: Routledge/Taylor and Francis, 2004.

Changing Structure of Mexico: Political, Social, and Economic Prospects. Armonk, N.Y.: M. E. Sharpe, 1996.

Diaz del Castillo, Bernal. The Discovery and Conquest of Mexico. New York: Da Capo Press, 1996.

Fuentes, Carlos. A New Time for Mexico. New York: Farrar, Straus and Giroux, 1996.

Garretón, Manuel Antonio, and Edward Newman, (eds.). Democracy in Latin America: (Re)constructing Political Society. New York: United Nations University Press, 2001.

Health in the Americas, 2002 edition. Washington, D.C.: Pan American Health Organization, Pan American Sanitary Bureau, Regional Office of the World Health Organization, 2002.

Mamnett, Brian. A Concise History of Mexico. New York: Cambridge University Press, 2006.

McElrath, Karen (ed.). HIV and AIDS: A Global View. Westport, Conn.: Greenwood Press, 2002.

Meyer, Michael C. The Course of Mexican History. 5th ed. New York: Oxford University Press, 1995.

, and William Beezley, (eds.). The Oxford History of Mexico. New York: Oxford University Press, 2000.

Morris, Stephen D. Political Reformism in Mexico: An Overview of Contemporary Mexican Politics. Boulder, Colo.: L. Rienner, 1995.

Nord, Bruce. Mexican Social Policy: Affordability, Conflict and Progress. Lanham, Md.: University Press of America, 1994.

Ratt, W. Dirk. Mexico and the United States: Ambivalent Vistas. Athens, Ga.: University of Georgia Press, 1996.

Semo, Enrique. The History of Capitalism in Mexico: Its Origins, 15211763. Austin: University of Texas Press, 1993.

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