Political Business Cycles in Mexico

Kevin and I have long been interested in political business cycles in developing countries.  We have a 2000 JLE piece called Political Cycles in Non-Traditional Settings, Theory and Evidence for Mexico, where we find a significant postelection economic collapse but no preelection boom, and that elections create, rather than resolve, inflation uncertainty.

So it was interesting to see the WSJ yesterday remarking on the same phenomena in Mexico in an article called “Mexico’s Curse of Economic Slowdown.” Anthony Harrup puts Mexico’s weak economic growth in 2013 in political context, noting that the first year of a new presidency often brings with it disappointing economic performances.

He lists GDP growth rates in the first and last years of presidential terms.  Presidents can only serve one term in Mexico so a transition always involves a change of leadership.

1994, last year of Carlos Salinas de Gortari 4.7%
1995, first year of Ernesto Zedillo -5.8%

2000, last year of Ernesto Zedillo 5.3%
2001, first Year of Vicente Fox -0.6%

2006, last year of Vicente Fox 5.0%
2007, first year of Felipe Calderón 3.1%

2012, last year of Felipe Calderón 3.8%
2013, first year of Enrique Peña Nieto 1.2%*

* Private consensus estimate from Bank of Mexico survey
Source: Inegi, Bank of Mexico

I didn’t know there was a term for this phenomena, but apparently the economist Jonathan Heath has named it the “sexenio curse” (presidents serve a 6 year term, or sexenio).  It was curious to find such a pronounced political business cycle in a one-party system, but the Mexican political system was unique in creating the incentives for one.  It’s interesting that the phenomena lives on in a democratic Mexico.  Perhaps we should update our paper and see if this new PBC is statistically significant…

 

 

 

Losing the pura vida?

The Christian Science Monitor has a piece on Costa Rica that discusses the disenchantment that voters have about politics in general and the February elections in particular.

Polling firms report that 32% of the population plans to abstain from the presidential election because of anger over “corruption, a lack of leadership, insensitivity to the average citizen, and unemployment.”  While the article tries to spin this as a new phenomena, citing “a much deeper and darker alienation this time around,” abstention was at least that high in the last two presidential elections (35% in 2006 and 32% in 2010).

The current president, Laura Chinchilla, only has a 9% approval rating as voters blame her for a variety of ills ranging from “collapsed highways, dengue outbreaks, and other calamities.”

Laura-Chinchilla-cropped

Johnny Araya, current major of San José, has the lead in the presidential polls but citizens aren’t too thrilled with him either.  Apparently, the infrastructure and security of the capital city has greatly deteriorated under his 12 year tenure and people are unhappy with “his personal lifestyle (including five marriages).”  Given that he has the edge in polling so far, I guess not everyone is unhappy with him, or perhaps they consider him the least bad option.

ARAYA

 

 

What could possibly go wrong?

Wow. Bobby Mugabe just opened his latest campaign for president. He’s 89, he’s lost at least the last two elections, but he’s still president, he’s still running hard, and he still is a very snappy dresser:

 

And, he and his surrealistic party ZANU-PF, have an amazing plan to fix Zimbabwe:

In the 108 pages of Zanu-PF’s election manifesto, the word “indigenisation” appears at least 156 times.

The party is not coy about this, declaring: “Only the indigenisation and people’s empowerment reform programme can meet the goals of the people. There is no other alternative.”

Under its plan, 1138 companies across 12 different sectors would be targeted over the next five years. The party believes the takeovers would realise $7.3billion in assets for the government.

The value of these assets would then be used as security against borrowings, which, Zanu-PF believes, would ultimately create total value of $29.2billion. The money would be used to rebuild the country’s infrastructure, support agriculture, and fund education and health.

 

People, after a government nationalizes 1138 companies, how many foreign lenders will be knocking on the door offering to loan them money?

 

 

 

 

Interesting links

1. Mexico’s Brain Drain

2. Streetlights bring normality in Mogadishu (normal is clearly relative)

3. Two good book reviews in the WSJ (sorry, gated). The first is a review of Paul Theroux’s The Last Train to Zona Verde: My Ultimate African Safari by the excellent Rian Malan. The second is a review of one of my favorite authors writing on China, Peter Hessler.  He has a new book called Strange Stones: Dispatches from East and West.

4. An interview with Iranian-American writer Amir Soltani, who has put forth a fictional middle age woman for president in Iran’s upcoming election.  Here is more in (another) gated article by the WSJ.  My favorite line is when Mr. Soltani responds to criticisms that his candidate is fictional.  He states, “She’s fictional fine, but so is the Islamic Republic. So is the position of the ‘supreme leader.’ So are Ahmadinejad’s votes in the last election.  So why not counter fiction with fiction.”  Excellent.

5. And, finally, in the department of uh-oh, there’s this chilling headline: “Mexican Drug Cartel Courts Civilians With Parties for Kids”  Apparently it’s not all that uncommon for Mexican drug cartels to throw parties for kids as a way to bolster social support, but this is the first foray into this kind of thing for the Zetas, who are primarily known for “extortion, murder, and kidnapping.”  I guess it’s a low bar then in terms of improving their image amongst the Mexican public.

Here is an amazing summary of the event:

Last weekend, hundreds of kids in the Mexican state of Tamaulipas danced to bands and played with clowns hired by the Los Zetas cartel. As entertainers welcomed kids to games and trampolines, cartel members set up notices throughout the city, urging the population to rethink Los Zetas’ role, and thanking children for bringing joy to their homes. “May God bless you all and always guide you on the good path to righteousness that you must follow to be men and women of good. God bless our little ones. Att. Los Z,” the message read.

I’ve always found clowns to be scary and creepy, but I cannot imagine how freaked out I would have been as a kid meeting a Zeta clown.  I may never have slept again.