Abstract

RIGUZZI, Paolo. A Historical Model of Institutional Change: Organization of the Mexican Economy, 1857-1911. Inv. Econ [online]. 1999, vol.59, n.229, pp.205-235. ISSN 0185-1667.

This article reflects on the institutional dimensions of the backwardness of Mexico's economy during the 19th Century. This reflection sets out from a stylized scheme of an economic organization within which ownership rights were insufficiently specified, the rules of the game ambiguous, and transaction costs high. This is the framework for this analysis of the institutional change that was implemented during the last two decades of the 19th Century. That change involved a process of re-defining the rules, of incentives and sanctions aimed at liberating economic energies, of broadening exchanges and re-assigning resources efficiently. The balance of this attempt allows a questioning of some elements within conventional wisdom, regarding the economic liberalization and structuring of secure markets during the Porfirio presidency. Resistance from various interest groups, extensive retention of the practice of State intervention, and time­ delays involved in the application of institutional rules, all hindered the consolidation of market opportunities, the entry of new economic agents, and the formation of stable expectations. Recovery from decades of institutional backwardness was only partially possible, and even that was defective. The result produced a breaking-up of the markets, and the rules controlling economic management were politicized once again.