This research examines the 1998 crisis in the Brazilian political economy, including the historical context in which the crisis surfaced the role of Brazil's political leadership and the role of external factors such as the Asian economic picture in the course of events as efforts were made to resolve all issues.
The collapse of the Mexican economy in the early 1990s and the subsequent American intervention to save Mexico from international-debt bankruptcy, was controversial in the US. Under leadership of Carlos Salinas, Mexico undertook massive internal reforms in the later 1980s and early 1990s, though domestic conditions worsened, with inflation running at 30%, real wages declining, and economic growth slowing. A longtime political rival of Salinas wrote in early 1990 that Salinas's policies would perpetuate Mexico's status as a subordinate nation to the US (Cardenas, 1990), hence guarantor of US Latin American regional policy. The Economist of London took a different view, noting that Mexico's performance was good compared to that of other Latin American debtors. Internal reforms included cutting public spending and opening commercial markets, and in 1991 and 1992, the road was being cleared for Mexico's participation in NAFTA:
The government negotiated a deal on foreign debt in March 1990. This, admittedly, had less to do with the government's skill at negotiation than with Mexico's proximity to America, ever fearful of an uncontrollable flood of Mexican immigration. The cut in debt-service payments was no more than $4 billion a year--smaller than originally hoped for (New model, 1990, p. 86).
Making Mexico full partner in NAFTA negotiations did not immediately resolve problems embedded in Mexico's political economy. Expert observers could not agree "whether the economic reforms will work, and whether democracy will wait" (Pastor, 1990, p. 3)--not just in Mexico but throughout the Third World, where debt dominated the eco...