Two Ways to Go Global

Peter Hakim

From Foreign Affairs, January/February 2002

Article preview: first 500 of 5,127 words total.

Summary:  For the first time, Latin America's two giants, Brazil and Mexico, are both looking for significant international roles -- but they are doing so in very different ways. Mexico has tied its future to economic integration with the United States, whereas Brazil seeks to be a leader in South America.

Peter Hakim is President of the Inter-American Dialogue.

THE DIFFERING PATHS OF MEXICO AND BRAZIL

For the first time ever, Latin America's two giants, Brazil and Mexico, are both looking beyond their borders for significant international roles. It is striking, however, how differently each is pursuing that goal. Mexico has linked its future to the United States and almost fully opened its economy to foreign trade and investment. Brazil, in contrast, remains a relatively closed economy, pursues an independent leadership role in South America, and is seen by the United States as an opponent on some issues.

Mexico's choices have clearly been influenced by the fact that it sits in the shadow of the world's richest and most powerful nation. Brazil, a continent-sized nation located some 2,400 miles from the United States and surrounded by ten smaller neighbors, has a rather different perspective on the world. Yet until recently, it was Mexico that most zealously shielded its independence from the United States.

Geography, to be sure, has played a major role in the pursuit of these divergent paths. But domestic politics and national ideologies have also been critical in molding the agendas of the two nations. Brazilian political leaders and thinkers, and even ordinary citizens, have long believed that their country should be counted among the world's most important states. Mexicans, meanwhile, historically have been less concerned about their place in the world than about their relations with the United States. Moreover, until Vicente Fox assumed the presidency in December 2000, Mexico was ruled by authoritarian and centralized governments. Recent Brazilian governments, on the other hand, have been more democratic than their Mexican counterparts but also weaker and more susceptible to popular pressure.

A CERTAIN SIMILARITY

Brazil and Mexico have enough demographic and economic heft to exert real influence in international affairs. At the outset of 2001, Brazil was the fifth most populous country and had the eighth-largest economy in the world. Mexico was the eleventh most populous and had the twelfth-largest economy. (Currency fluctuations in the past year have left the two economies about the same size in dollar terms, although Brazil's domestic purchasing power remains much larger.) On a per capita basis, their ranking falls considerably, but by World Bank standards they are comfortably upper-middle-income countries.

For the past six decades, Brazil and Mexico have also shared a remarkably similar economic history. From 1940 to 1980, they attained some of the highest growth rates in the world, averaging more than six percent a year. At the same time, both nations indulged in massive foreign borrowing. By the early 1980s, crushing debt burdens had pushed them deep into recession. Since 1980, each country's economic growth has dipped to a dismal average of about 2.5 percent a year, although Mexico's growth began accelerating in the latter half of the 1990s.

In this period, both nations initiated economic reforms known as the "Washington consensus," a combination of fiscal discipline, privatization of state-owned businesses, and foreign trade liberalization. Income and expenditures were brought increasingly into balance. In 1994 ...

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