4) most important event of 1994*

PAN: The Economic Crisis in 1994

Much has been said about the liberal period of modernization and the subsequent crisis that occurred in Mexico in December 1994. Mexico's international reserves fell and the currency was devalued by almost one hundred per ciento1. Even now, ten years later, there is a strong debate between those who blame this debacle later called the error to December and those who attribute the devaluation to the way in which economic policy was during the Salinas de Gortari. The literature is extensive and though the subject has been discussed widely, not yet reached agreement on the causes of the devaluation. In general, the argument of this paper is that Zedillo himself made two major mistakes: (1) his inexperience prevented him from perceiving the customization of Mexican institutions and (2) the devaluation took place slowly. However, the main cause of the 1994 crisis was the fragility with which Salinas de Gortari left Mexico's finances. During the Salinas de Gortari is committed five major errors: (1) devaluation was avoided electoral issues, (2) is not properly negotiated with the political left-that is, the PRD-, (3) avoided devaluation for the FTA to be ratified by the United States, and (4) believed that economic instability that Mexico had was short term, long term, the gap between exports and imports would be closed due to repatriation of capital, investment flows from foreign companies and voluntary lending from abroad.