As many other developing countries in Latin America and elsewhere, but perhaps faster and farther than most of them, Mexico has been moving the 1980s towards a liberalized trade regime after a long period of import substitution industrialization. Compared to other experiences, and especially to those which are also well advanced in this process such as Chile and Bolivia in Latin America, the Mexican case shows a number of singular features which, over a longer time span, will probably make it a unique case of economic and political success in terms of the smoothness of its transition, the small adjustment costs involved, the virtual absence of political tensions and resistance to change.

This paper argues that—besides the critical role of non-economic factors, including geography and polities—this outcome can largely be attributed to the no less successful experience that Mexico had with import substitution industrialization and, perhaps more paradoxically, to the very adverse macroeconomic conditions under which trade reform was undertaken in the 1980s. At the same time, and for related reasons, the paper is rather skeptical about the long term benefits that the particular form adopted of trade liberalization is likely to bring.