Since 1982, mexico has based its economic strategy on four key principles: sound public finances, trade liberalization, deregulation of industry sectors, and privatization of public enterprises. Indeed, among governments that have deregulated and privatized, few can lay claim to a program as profound and far-reaching as Mexico’s.

Except for the few sectors that remain in government hands, the authorities have liberalized most—including steel, telecoms, banking, airports, electricity, ports, roads and highways, radio and television, and water—with a view to encouraging a stronger role for markets. Discussions are under way that suggest that even education could be liberalized. Exhibit 1 lists the areas open to private investor participation. As a consequence, the public-sector presence in Mexico’s economy has declined considerably since its peak in 1982 (Exhibit 2)—mostly as a direct result of the privatization of state-owned enterprises (Exhibit 3). These sell-offs have produced considerable revenues (Exhibit 4), and have had a dramatic effect on the country’s overall attractiveness to foreign investors (Exhibit 5).

Process

During these years of privatization, the Mexican government’s role has changed from that of an operator of a very diverse portfolio of holdings to a regulator of...