Abstract
Organized business in Puebla and Querétaro exhibited systematic differences in their political and economic preferences beginning in the 1980s. This chapter provides evidence that business associations in Querétaro supported growth-enhancing policies such as economic integration and investments in education and infrastructure, while their counterparts in Puebla tended to demand protection from competition and industry-specific subsidies. Puebla’s peak business chambers also had strong partisan preferences against the PRI, while organized business in Querétaro was non-partisan. These differences arose because Querétaro’s business associations successfully incorporated large, foreign and domestic manufacturing firms into their ranks starting in the 1960s, while in Puebla, large firms opted out of business associations, ensuring these organizations continued to be dominated by local firms in traditional sectors. Differences in the organization and preferences of business associations had major consequences for the pattern of interaction between the public and private sectors in the two states.
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- 1.
This expectation also derives from Olson’s work on collective action (1982) and follows from the intuition that when an association is encompassing, its members benefit more from an improvement in overall welfare than a redistribution of existing wealth to a particular group. Encompassing associations thus mitigate distributional conflict within the business sector (Durand and Silva 1998).
- 2.
Olson (1982) predicted that, for these reasons, encompassing business associations would be rare in practice.
- 3.
In particular, large firms can more easily bear the costs of organizing business associations (see Shadlen 2004).
- 4.
The intuition is that large, internationally integrated firms are more likely to benefit from such policies. However, this expectation may not hold for large firms in sectors such as natural resources and regulated utilities, or for large multinationals that carry out training and technology development in-house (see Schneider 2014). Chapter 2 discusses these issues in more detail.
- 5.
The Díaz regime, or Porfiriato, lasted from 1876 until 1910, although Díaz ruled indirectly through a close ally between 1880 and 1884. See Haber et al. (2003) for a description of the relationship between Díaz and Mexican capitalists.
- 6.
The chambers’ dependence on the government—and resulting limitations on independent, critical postures—derived from several sources. Most fundamentally, the combination of mandatory affiliation and government control over the formation of new chambers meant chambers’ influence and, in fact, their viability depended on the state. In several instances in the 1960s, groups of businesses representing the chemical or automotive sectors sought to break from Canacintra, but the government, which retained the exclusive right to sanction new chambers, refused to recognize them (Schneider 2004).
- 7.
Leaders of the Confederation of Mexican Workers (CTM) and National Peasants Confederation (CNC) generally received a share of PRI nominations for seats in the local and national legislatures.
- 8.
Industry protection relied heavily on import licensing, which excluded the possibility of importing products for which close domestic substitutes existed. The structure of protection had an escalating nature in which downstream production stages received greater protection. Moreno-Brid and Ros (2009) report that effective protection levels reached 85 percent for consumer durables and capital goods by 1960.
- 9.
Shafer (1973) reports that federal officials regularly consulted with business leaders on taxation, price controls, and trade policies, especially when new legislation was under consideration. In light of these relations, Shafer concludes “the fiction is that the Revolution thrust business out of politics” (1973; 133).
- 10.
The CMHN invested heavily in both the CCE and Coparmex during this period. The CCE developed a full-time staff, research capabilities, and a public presence through publications and media outreach (Schneider 2004).
- 11.
Coparmex President Alfredo Sandóval did not obfuscate on this point, asserting that “instead of reacting, we want to participate in the process of making decisions over the long-term” (quoted in Montesinos Carrera 1992).
- 12.
The 1982 default led to a deep recession in 1983, and economic malaise would continue for most of 1980s.
- 13.
Ernesto Ruffo Appel, the victor in Baja California’s landmark 1989 gubernatorial race, had been president of the state’s peak business association before entering politics. Business people-turned-politicians subsequently won governorships for the PAN in Guanajuato in 1995 and Querétaro in 1997. Entrepreneurs were the driving force behind the rise of the PAN in the state of Chihuahua, as documented by Mizrahi (1994).
- 14.
Mexico’s textile exports increased ten-fold between 1940 and 1945 as US, European, and Japanese producers channeled all textile goods to the war effort. Despite a post-war slump, the sector accounted for 19 percent of national manufacturing output in 1955 (Gauss 2010).
- 15.
In 1950 Querétaro had a population of 286,000, compared to 1.6 million for Puebla.
- 16.
The close personal relationships between Bernardo Quintana, the president of ICA, and the queretano political and economic elite thus proved crucial to the state’s initial industrial surge in the 1960s (see Miranda 2005).
- 17.
The motivation for the company’s decision to establish its main production facility in Puebla (the firm had had a small presence in the State of Mexico beginning in 1962) remains subject to debate. Most observers point to the influence of President Gustavo Díaz Ordaz, a native of Puebla, who presumably intervened in favor of his home state.
- 18.
The firms investing in these sectors include Hylsa, part of a Monterrey-based conglomerate, in steel and metal; Alumex, a major aluminum producer; and Polimeros de México in the chemical and plastics sectors.
- 19.
The modifier “modern” or “modernizing” is applied in a relative way. Mexico’s domestic business groups were far from a model of productivity and efficiency, and foreign investors generally did not deploy state-of-the-art technology in Mexico. Still, these firms had by the 1980s developed modern production processes based on advanced (if generally imported) technology. As Mexico reduced trade barriers, links between domestic groups and the global economy brought these firms closer to the technology frontier (Castañeda 2008). Compared with small local business, then, the large firms that arrived en masse in Puebla and Querétaro beginning in the 1960s were indeed modern, and this gap would increase over time.
- 20.
These three firms were among the state’s ten largest exporters in 1986 (Secretaría de Desarrollo Económico de Querétaro 1986).
- 21.
Representatives of ICA also participated in the creation of Coparmex in Querétaro (see Chapter 4).
- 22.
While the state’s first panista governor, Ignacio Loyola Vera, had previously been president of Coparmex, other past leaders such as Alejandro Espinosa Medina, Tonatiuh Salinas Muñoz, and Rafael Rodrigo Tolentino have served in local PRI governments.
- 23.
Notably, the CCE did not take hold in Querétaro because business leaders decided it would compromise the independence of existing groups. Interview with Alejandro Espinosa Medina, 17 March 2016. Querétaro finally saw the establishment of the CCE in 2014, but it remains a marginal actor in the state’s politics.
- 24.
A partial exception is Luis Regordosa Valenciana, CCE president from 2002 to 2005, who ran Grupo Embotellador Bret, which bottled and distributed Pepsi products in four southeastern states, including Puebla. Regordosa took the firm public in 2002, the first public listing of a Puebla firm since the failure of Banco de Oriente in the 1990s. See CNN Expansión: http://expansion.mx/negocios/2008/04/21/las-batallas-de-geusa and El Universal http://archivo.eluniversal.com.mx/finanzas/27810.html.
- 25.
The second and third generations of many traditional textile families often pursued other business activities such as commerce, real estate, and construction (Villavicencio 2013). CCE Presidents José Yitani and Juan José Rodríguez Posada reflect this pattern.
- 26.
- 27.
Interview with Volkswagen executive, 26 January 2016.
- 28.
Interview with Alejandro Espinosa Medina, 15 April 2016.
- 29.
The sources used for this exercise are the major local print media in the two states—El Sol de Puebla, Diario de Querétaro, and Noticias de la Mañana (Querétaro). Data were collected for particular date ranges that correspond to major economic and political events such as Mexico’s entry into GATT, the signing of NAFTA, presidential elections, and major policy debates. Each statement of an economic or political position by a representative of a local business organization was identified, recorded, and coded according to the primary view expressed. The resulting dataset includes 634 opinions expressed by 250 local business people representing 54 associations. See Appendix I for a description of the methodology used in this exercise and discussion of issues surrounding bias in local newspapers in Mexico.
- 30.
To test this proposition, the statements included in the dataset were divided into two categories: “political” views such as support for electoral participation, statements of partisan preference, or evaluation of particular officials; and “economic” views addressing trade liberalization, inflation, budgets, and a range of other policy issues.
- 31.
As described above, the periods from which business leaders’ opinions are drawn overlap with either major economic changes such as Mexico’s entry into GATT and the NAFTA negotiations or major political events such as elections. The former are referred to as “economic events” and the latter as “political events.”
- 32.
As opposed to a non-partisan statement, such as calling for “peaceful elections,” or for the vote to be respected, which made up an important part of private sector discourse around elections in both states. By contrast, the Puebla business sector often made comments suggesting that any threat to democracy or social peace emanated from “the party that has refused to accept losses” or “wants to always keep power”—criticizing the PRI without mentioning the party by name. Appendix I provides more examples of the exact language used to identify each class of statement.
- 33.
Diario Cambio, 13 February 1985, “Los empresarios sí aspiran al poder, dice Jorge Ocejo”; emphasis added.
- 34.
See, for example, Diario Cambio 8 March 1986, “Una sociedad libre y democrática no requiere de tanta burocracia: Cabañas” and Diario Cambio 20 December 1984, “En términos reales no hubo mejoría económica: C. Textil.”
- 35.
These statements provoked a sharp rebuke from CTM leaders who called them “a political fiction.” Diario Cambio 1 August 1984, “Se quiere implanter el socialism en el país: empresarios”.
- 36.
Support for domestic competition includes statements in favor of price liberalization and the sentiment that competition, productivity, and quality are key to economic progress. “Active development policies” include support for industrial parks, technical training, and policies to promote domestic supply chains. See Appendix I. As discussed in Chapter 2, in labeling economic integration “broadly growth-enhancing,” I appeal both to classical trade theory and the context of pre-reform Mexico, where trade protection created particular benefits for narrow sub-groups of firms.
- 37.
In this regard, the Querétaro branch of Canacintra is something of an outlier, given the national chamber’s ambivalent views regarding Mexico’s economic reforms, which went against the interests of its main constituents (see Shadlen 2004).
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Kahn, T. (2019). Origins and Consequences of Divergent Private Sector Organization in Puebla and Querétaro. In: Government-Business Relations and Regional Development in Post-Reform Mexico. Latin American Political Economy. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-92351-2_3
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