Is Mexico headed for real instability?
MEXICO CITY — Mexico's rich and powerful got even more rich and powerful during the six-year term of outgoing President Vicente Fox.
That's the conclusion of a World Bank study released this week that said Mexico's business elite and powerful public-sector unions were a major drag on the nation's economy.
The net worth of Mexico's billionaires soared, from just over 4% of gross domestic product in 2000 to about 6% in 2006, according to the study. Strong earnings at big corporations have driven the stock market to repeated highs.
But those benefits haven't been widely shared. The concentration of economic power in few hands has saddled Mexican consumers with high prices, exacerbated income inequality and retarded economic growth.
Over the last six years, Mexico's gross domestic product has expanded only about 2.3% a year on average. The nation has created less than a quarter of the 1 million net new jobs it needs annually just to keep up with growth in the working population.
Nearly half of Mexico's 106 million people live in poverty. Yet it has more billionaires than Switzerland — 10 last year — according to Forbes magazine's list of the world's richest people. Many of them inherited their wealth or built their fortunes in Mexican industries that have little or no competition and aren't likely to anytime soon.
Carlos Slim, the world's third- richest man with a net worth estimated at $30 billion, owns telecom companies that control 94% of Mexico's land lines and 80% of its cellular service.
Broadcasters Televisa and TV Azteca own 94% of Mexico's television stations. Two brewers, Grupo Modelo and Cerveceria Cuauhtemoc Moctezuma, have a combined market share topping 99%.
Their sway over Mexico's economic and political life is eroding faith in Mexico's institutions, which many here believe are set up to protect the interests of Mexico's rich and powerful.
Companies controlled by Mexican billionaires are more likely to be engaged in monopolistic practices than other firms, and they are much more likely to win judicial stays known as amparos allowing them effectively to ignore regulators' rulings against them for years while the cases are appealed. Full story at LA Times