Big Business, the State, and Free Trade

INTRODUCTION

The structural power relations between business and the Mexican state shifted in favor of business in the 1980s and 1990s. Both business's structural leverage and the state's dependence on private investment rose noticeably. These shifts, in turn, affected the incentives and capacities of both business and state leaders to construct policy coalitions. While the approach of this study goes well beyond a purely structural one, it is useful to separate out the structural components of the analytical framework in order to trace them empirically. The next section of this chapter deals with the issue of business leverage, and the third takes up the state's vulnerability to that leverage. The fourth assesses the combined effect of these changes on the overall structural power relationship between business and the state from the early 1970s to the early 1990s.

BUSINESS LEVERAGE

The structural power of business is a positive function of business leverage and state dependence. This section addresses the issue of business leverage, which is closely related to patterns of international capital mobility facing a country. The level of capital mobility faced by asset holders for a given country can be traced to two different sets of factors, one of which operates at the international level and the other at the domestic level. The first concerns the impact of international financial integration, while the second deals with the nature and characteristics of capital assets and markets present in the given country.