In Mexico, postdevelopmental decentralization was initiated from the top down by the national executive. By the end of the first cycle of reforms, however, the decentralization of government had undermined the seven-decade-long hegemony of the Institutional Revolutionary Party (Partido Revolucionario Institucional, PRI) and the power of the president. In fact, decentralization served as a tool that allowed the PRI a slow and orderly retreat. The decentralization of responsibilities, resources, and authority and the opening of spaces for political contestation “little by little” from the local level upward permitted the PRI to navigate through two major economic and financial crises, those of 1982 and 1994, and to hold on to the presidency until 2000, much longer than would have otherwise been possible.

But unlike what happened in Argentina, where postdevelopmental decentralization was also single-handedly initiated from above, governors and mayors significantly increased their autonomy vis-à-vis the president in Mexico. Why, despite the similar prevalence of national territorial interests in the early decentralization reforms, did the intergovernmental balance of power evolve so differently between these two countries? In this chapter, I show that postdevelopmental decentralization in Mexico constituted a reactive sequence of reforms and not a self- reinforcing sequence, as was the case in Argentina. It is the different nature of these two path-dependent sequences that accounts for the divergent outcomes.