The Performance of the Economy of the Yucat´an Peninsula from 1970–1993
5.5 Yucat´an’s Economy
Economic stagnation in the state of Yucat´an in the 1970–1988 period was chiefly caused by the henequen production and processing crisis, since for nearly one cen-tury henequen had been the main source of demand and investment of resources in the state. The decay of henequen production became evident in the 1960s, par-ticularly in the ejidos. Consequently, maintaining the level of demand depended on subsidies provided by the federal government. In 1964, the federal government bought the private enterprise that carried out the processing of the henequen fiber and initiated an industrial modernization program. In 1970, the public enterprise Cordemex had an installed capacity to process 100,000 tons of henequen, roughly the amount of fiber production. Thus, in the early 1970s, the Mexican government controlled almost all henequen production and processing.
Prices of products made of henequen fiber increased on the international mar-ket during the first half of the 1970s, resulting in increased prices for henequen leaves and higher wages and demand in Yucat´an. Thus, the state’s economy grew at an annual growth rate of 8.7% for the 1970–1975 period. However, the hard fiber industry did not grow during this period. This is partly explained because measure-ments of GDP growth attempt to gauge real rather than monetary growth. So, even when there was an increase in financial resources, growth of physical henequen production was insignificant. Nonetheless, the contribution of the manufacturing industry to the state’s GDP was around 25% (see Table 5.6).[10] In 1975, there was a crisis in the world hard fiber market, which decreased the intensity of Cordemex activities.
A useful indicator of the level of economic activity during the period considered here is the performance of the construction industry, which grew at approximately 20% per year. In general, most economic sectors, with the exception of forestry (not shown here), showed high growth rates as a result of the high demand in the state’s economy. The poor performance of the forestry sector was due to the decline of forests in the jungle of the eastern part of the Yucat´an peninsula in the 1970s.
Economic decline stemming from the henequen crisis was counterbalanced to some extent by the boom in construction in Canc´un, Quintana Roo, as well as
Table 5.6. Relative contribution of sectors to Yucat´an’s gross domestic product (%).
Sector 1970 1975 1980 1985 1988 1993
Agriculture and fisheries 12 11 8 10 8 9
Mining 0 0 0 1 1 1
Manufacturing 22 26 17 16 22 12
Construction industry 4 7 9 7 6 6
Electricity, gas, and water 1 1 1 1 1 2
Commerce, restaurants, and hotels 30 26 30 32 31 22
Transportation, storage,
and communication 4 6 6 7 8 12
Financial and insurance services
and real estate 13 10 11 7 7 17
Communal, social, and personal
services 14 14 19 19 18 21
Other banking services –1 –1 –1 –1 –1 –2
Total 100 100 100 100 100 100
Sources: Authors’ calculations based on the sources listed in Table 5.1.
by financial resources derived from oil exports, which were partly directed to the development of the state.[11] The latter helped to maintain a moderate level of subsidies for henequen production, thereby contributing to the state’s economic demand.
Of the three peninsular states, industrial development was furthest along in Yucat´an. There, capital accumulation from henequen-related activities contributed to industrial diversification, including leather processing, printing, and production of cement, nonmetallic and mineral products, footwear, and animal feed.
The growth of Yucat´an’s different economic branches was uneven during the 1985–1988 period. The agricultural sector’s production declined because of the damage caused by Hurricane Gilbert in 1988. However, cattle production grew at 4.8% per year, and forestry production and fishing activities grew at an annual rate of 10%. The manufacturing industry had an annual growth rate of 5.2%, chiefly due to the recovery of the hard fiber industry, which, helped by a henequen-promoting program, grew at 7%. Cement production and the plastic products industry grew markedly. In contrast, the construction industry declined, as did the financial sector;
growth in commerce and restaurants and hotels stagnated. The communication industries and leasing of real estate grew rapidly. Professional and educational services showed moderate growth, while growth of medical services was sluggish.
Public administration, defense, and “other services” had high growth rates.
Yucat´an’s economy recovered from 1988–1993, showing an annual growth rate of 4%. During this period the manufacturing industry stagnated and then declined,
performing at an average annual growth rate of 0.6%. Such behavior was mainly the result of a sharp decline in the fiber industry, which was not fully counterbal-anced by the growth of the food and beverages industries. Communal, social, and personal services stagnated, except leisure services (cinema, radio, television, and nightclubs), which grew at 13.9% per year. The recovery of the state economy in this period was based on the high annual growth rates of the agricultural sector (ap-proximately 10%), financial services and real estate leases (11%), communications (26%), electricity (10.4%), and restaurants and hotels (5.6%). The construction and transportation industries grew between 3% and 4% per year. The commercial sector had an annual growth rate of 1.5%.
The 1970s were the last time that henequen production in Yucat´an was prof-itable. The 1980s saw a decline in the growth rate of the state’s economy. Despite the deep crisis of the hard fiber industry, from 1988–1993 the state’s economy grew at a rate higher than the national average (4% versus 2.8%). Although the produc-tion of nondurable goods (food, beverages, and tobacco) represented 50% of the manufacturing GDP, the manufacturing industry was more diversified in the 1990s than it was in the 1970s, when the hard fiber industry predominated.
5.6 Perspectives
The economy of the Yucat´an peninsula has undergone a number of significant changes. The focus of investment has shifted from Yucat´an to Quintana Roo.
Tourism has replaced henequen production and processing as the main source of economic growth. At the same time, oil production along the coast of Campeche has increased significantly, but its impact on the peninsula’s economy has been neg-ligible. Of the three states that make up the peninsula, the economy of Quintana Roo is the largest, that of Yucat´an is the most diversified, and that of Campeche is the least developed.
During the next 20 years, the peninsula’s economy might be affected by the following processes:
Tourism will expand, particularly in the Canc´un–Tul´um corridor and in the southern region of Quintana Roo. As a result, Chetumal’s economy might be revitalized. Increases in both tourism and population suggest that the main problems might be environmental. There is the risk that the chief basis of tourism, namely, unique natural resources, may be destroyed if private invest-ment is not subject to strict environinvest-mental control. Tourism will be the most dynamic economic activity on the Yucat´an peninsula in the short and medium terms. However, it is likely that tourism will face increasing competition from
other countries in the Caribbean and elsewhere. In the long term, the high de-pendence on tourism and the lack of economic diversification may lead to the stagnation of Quintana Roo’s economy.
Oil production along the coast of Campeche has had a meager impact in the state’s economy. However, the state’s current economic, social, and political development requires the use of a larger proportion of oil revenues for develop-ment purposes.
The promotion of maquiladoras in Yucat´an may help to shape a new capital ac-cumulation model. However, the effects of such a model on the regional econ-omy may be limited. Nonetheless, maquiladoras can contribute to regulating the migratory flows from rural areas to the city of M´erida. The maquiladora program might be helpful in alleviating unemployment problems in the short term, but it should be considered only as a transitory and/or complementary measure. It should not replace industrial and agricultural development policies.
In all three states of the peninsula, one problem must be solved: integrating the Maya into the modern economy without destroying their culture. In the past, development programs have paid little or no attention to their participa-tion. This problem needs a prompt solution that addresses cultural, economic, political, and environmental concerns.
The development of this region requires scientific and technological innovation.
Without such innovation, economic development will be limited to the peninsula’s comparative advantages (natural resources, low wages). The continuous supply of well-paid employment is dependent on a regional economy in which enterprises, government, and academic institutions work together. International competition demands the development of competitive advantages. In doing so, corporate inno-vation, increasingly dependent on scientific and technological research, is central.
Future economic growth of the Yucat´an peninsula will be largely dependent on technological innovation policies.[12]
Notes
[1] Between 1980 and 1985 several adjustments were made to the methodology used to estimate the GDP that affected the comparability of information between different periods. Where possible, various minor modifications have been made to deal with these changes. The annual growth rate from 1988 to 1993, based on 1980 prices, is 1.3%, which is higher than that obtained using 1993 prices. In both cases, there is clear stagnation.
[2] It has not yet been be determined whether this recovery is a result of changes in the fundamentals of the economy.
[3] Translator’s note: This divergence in economic performance may stem from the greater diversification of Yucat´an’s economy and its integration with the economy of Quintana Roo, as well as from the latter’s dependence on the conditions of the external market and thus its lower susceptibility to changes in the national economy.
In contrast, Campeche’s economy relies on a small domestic market and lacks strong linkages with, and the dynamism originating from, external markets.
[4] The value of oil production has not been considered in these calculations. Using the per capita GDP growth rate based on 1980 pesos (1.3%), the per capita GDP decline would be still high (2%).
[5] Translator’s note: Linkages with foreign markets make it possible for firms to attain economies of scale, and the domestic economy benefits from the impacts of com-petitive pressures on prices, product improvement, and technological advancement.
In attaining such theoretical advantages, it is crucial to have a governmental system that will properly distribute resources to take care of those negatively impacted by economic growth.
[6] The economic problems of the state of Yucat´an, resulting from its high reliance on henequen production, might suggest that a similar situation is likely for the state of Quintana Roo. Such a situation may originate from Quintana Roo’s very high eco-nomic dependence on tourism, which increases the state economy’s vulnerability to changes in the sector.
[7] A potential bias might arise from using the national implicit price indexes in the service sector calculations.
[8] The effects of PEMEX’s activities in the state’s budget were not taken into account for this discussion.
[9] The decrease in forestry activities may be explained by both the destruction of the rain forest, which decreases the availability of forest resources, and the increase in governmental regulations in the sector.
[10] The fiber industry generated approximately 50% of the manufacturing industry’s eco-nomic value. The contribution of each sector to ecoeco-nomic growth was calculated as follows:
[(GPit + 5)-GPit]/[(TGPt+5)-TGPt] ,
where GP is gross domestic product for each industrial branch. The subscripti repre-sents each of the 73 sectors;trepresents the year 1970, 1975, 1980, 1985, and 1988;
and TGP is total gross domestic product. During the 1985–1988 period, the formulas changed tot+3.
[11] The development of Canc´un increased the demand of goods and services in the state of Yucat´an; moreover, remittances to the state were received from Yucatecans who migrated to and worked in such centers.
[12] Translator’s note: In general, given the accelerating rate of change, successful devel-opment of the Yucat´an peninsula may require the establishment and functioning of
a set of processes at different organizational levels for making sense of a changing environment; for developing new internal resources and capabilities; for accessing new external resources; for defining new organizational, regional, state, and peninsu-lar goals; and for coordinating available resources and capabilities in the pursuit of an evolving set of strategic development goals.
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