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8. Mexico City: No longer a leviathan?

Introduction
The Mexican urban structure: the roots of centralism
The debt crisis and its aftermath
Mexico City's changing urban structure
Administration and finance
Current issues and policy approaches
Conclusions
Notes
References

Allison Rowland and Peter Gordon

Introduction

When the United Nations issued a report on Mexico City in 1991, it concluded that "in recent years ... projections of Mexico City's population have converged, with most now assuming a population of 25 to 27 million by the end of the century" (UNDIESA, 1991: 7). Only two years later, however, new data combined with assessments of the effects of new national policies cast doubt on whether the city will ever reach this size, let alone do so in less than a decade. An important factor in this reassessment has been the subsequent release of the 1990 population census, which added to a growing conviction that the 1980 data upon which many of the more spectacular projections rested was significantly incorrect. The 1990 data show a much more modest rise than previously expected in the city's population since 1970.

Forecasting error is not the only cause for reconsidering estimates of the future size of Mexico City. The scope and rapidly spreading consequences of economic reforms brought about by President Carlos Salinas de Gortari since 1988 have added credence to projections of a smaller Mexico City.

Internationalization of the Mexican economy since 1986 has had a marked effect on the country's urban structure. Examination of the 1990 population census confirms that on balance people and jobs are no longer moving to Mexico City or to the central region of the country. Recent economic census data tell a similar story, suggesting that these trends will continue because new investment in manufacturing has tended to occur outside the Mexico City region.

If population movements continue to follow the current pattern of deconcentrated economic expansion, the doomsday scenarios for an overcrowded, unmanageable Mexico City should be rethought. More importantly, the policies and proposals designed to cope with traffic congestion, air pollution, water, housing, and solid waste disposal have to be reassessed. The cost of dealing with these problems may be less than previously predicted.

The Mexican urban structure: the roots of centralism

Mexico is similar to most other Latin American countries in so far as a high degree of urban primacy has become the norm. The roots of this pattern are found in the historical concentration of political power, economic activity, and population (Davis, 1994; Garza and Schteingart, 1978; Gwynne, 1985; Scott, 1982). Subsequent industrialization accentuated this pattern; investment was concentrated in the largest cities: Mexico City, Guadalajara, and Monterrey. The availability of jobs attracted large numbers of migrants to those cities (figure 8.1).

By 1950, Mexico City was home to 12.3 per cent of the national population, while the two next largest urban areas, Guadalajara and Monterrey, together accounted for only 3.2 per cent of the national total (table 8.1). By 1970, the shares of all three cities had grown, to 17.9 per cent for Mexico City, 3.0 per cent for Guadalajara, and 2.4 per cent for Monterrey; by 1990, the shares were 18.5 per cent, 3.5 per cent, and 3.2 per cent respectively. By 1950, Mexico City accounted for 25 per cent of all persons employed in manufacturing industry, a level of dominance that peaked at 42.1 per cent in 1970 (table 8.2).

Spatial concentration in Mexico was accentuated by import-substituting industrialization (Gwynne, 1985: 84-5; Portes, 1990). Other government policies aggravated these centralizing tendencies. During the 1960s and 1970s, most public investment in water, education, power, and transport was directed at urban areas, with Mexico City receiving the highest share. In addition, direct and indirect subsidies for water, corn, electric power, diesel fuel, and public transport offered special advantages to Mexico City (Garza and Schteingart, 1978; Scott, 1982).

Figure 8.1 Mexico City: The metropolitan region

Deliberate government efforts to reverse this concentration of industrial activity were ineffective and sometimes counterproductive. The most serious problem was that few decentralization policies took the differing potentials of the regions into account. Thus, a limited amount of public investment was spread over a wide and undifferentiated periphery - not surprisingly, to limited effect (Scott, 1982). More targeted policies during the 1970s, for example industrial complexes and parks, had little effect on industrial location (Aguilar-Barajas, 1990).

Table 8.1 Population of Mexico's ten largest urban areas, 1950,1970, and 1990

Source: Respective national censuses.

Table 8.2 Manufacturing employment, 1950,1970, and 1988 (numbers of employees)

Sources: Derived from Garza, 1987, and Gordon et al., 1993.

While the maquiladora programme has successfully increased economic activity on the border with the United States and has attracted substantial migration to the border cities, the maquilas have generally failed to generate significant industrial linkages or to stimulate growth in other parts of Mexico (Scott, 1982; Wilson, 1992).

The debt crisis and its aftermath

The import-substituting industrialization model came to an abrupt end with the Mexican debt crisis of 1982. Subsequent macroeconomic policies, implemented at the behest of the International Monetary Fund and foreign banks as a condition for loan rescheduling, attempted to restrain public spending, liberalize the economy, and attract foreign investment. The initial result of these policies was severe recession. However, since 1986 real GDP growth has revived, reaching 1.4 per cent in 1987, 3.1 per cent in 1989, and 2.6 per cent in 1991.¹

Table 8.3 Growth in manufacturing, commercial, and service sectors, 1985-88

Sources: Derived from Rowland, 1992, and INEGI, 1989.

Domestic and foreign investment flows responded to the liberalization measures - in some cases in anticipation of the implementation of the North American Free Trade Agreement (NAFTA). Direct foreign investment of only US$491 million in 1985 had increased to $4,762 million by 1991; as a proportion of GNP this represents a rise from 0.3 per cent to 1.7 per cent.

The new export-oriented economic model, combined with the effects of structural adjustment, has had striking effects on the distribution of manufacturing, commercial, and service employment nationwide. The most significant changes are the decline in Mexico City and the growth of the northern border region. Between 1985 and 1988, employment in the border states grew at almost three times the national average, while the net number of jobs in Mexico City fell (table 8.3). Export-oriented production favoured cities with ports, those along the northern border, and those in areas with natural resources (Gordon et al., 1993; Pradilla, 1990; Rowland, 1992). Most such cities are outside the previously favoured region of central Mexico.

Entry into NAFTA is likely to continue this trend and bring benefits for particular industrial sectors. In the context of an overall rise in employment, the "winners" are generally predicted to be apparel, footwear, pottery, leather, furniture, services, construction materials, beverages, plastics, and rubber. The "losers" are expected to be chemicals, machinery, paper, non-ferrous metals, and tobacco (Gordon et al., 1993).

Mexico City may well continue to lose out relative to other areas if these forecasts are correct. Gordon et al. (1993) suggest that supplier links with growing areas and sectors of the economy are weak for those establishments located in the capital. Therefore the impact of the country's economic liberalization will depend primarily on the extent to which the city remains a national centre for finance and capital.

The other, less quantifiable, national trend affecting economic growth in Mexico City lies in the country's political structure. Traditionally highly centralized and tightly controlled by the dominant political party, the Institutional Revolutionary Party (PRI), the political system has in recent years become more open to opposition parties and more responsive to local conditions. If this trend continues, the need for large companies to put their headquarters in Mexico City may diminish. The vast labour force employed in the government bureaucracy may also be reduced or even dispersed to other parts of the country.

In the past, agglomeration economies, local market size and wealth, and direct contact with the national government played important roles in the spatial structure of the Mexican urban system. However, in the 1980s, as export markets became more significant, production processes worldwide changed, and transportation and communication facilities in Mexico improved, traditional location factors lessened in importance for many firms. At the same time, congestion costs in Mexico City increased and evidence of polarization reversal began to appear (Gilbert, 1993b: 731; Portes, 1990; Richardson, 1989). One outcome was the gradual emergence of a polycentric spatial structure in central Mexico: an antidote to both the exhaustion of agglomeration economies and crippling congestion.

Mexico City's changing urban structure

Population growth and decentralization

The results of the 1990 census suggest that two significant changes have occurred in Mexico City. First, population growth has slowed (table 8.4). Between 1970 and 1990, average annual population growth for Mexico City was half of what the 1970 to 1980 data suggested. The explanation for this depends on the credibility accorded the 1980 census figures. If they are discarded, we can conclude that population growth fell gradually over the twenty-year period. If not, the 1980 data suggest that rapid metropolitan growth continued through the 1970s and then fell off sharply in the 1980s, presumably in response to the economic crisis beginning in 1982. However, this view implies that average annual growth plummeted from 4.4 per cent in the 1970s to 0.2 per cent in the 1980s. A drop of this extent is unlikely.

Table 8.4 Population growth in Mexico City, 1970-1990

Source: Gordon, 1992.

Mexico City Ring definitions:
Central City
DF: Benito Juárez, Cuauhtémoc, Miguel Hidalgo, Venustiano Carranza.
First Ring:
DF: Azcapotzalco, Coyoacán, Cuajimalpa, Gustavo A. Madero, Iztacalco, Iztapalapa, Alvaro Obregón. State of Mexico: Naucalpán, Netzahualcóyotl
Second Ring:
DF: Magdalena Contreras, Tláhuac, Tlalpán, Xochimilco. State of Mexico: Atizapán de Zaragoza, Chimalhuacán, Coacalco, Cuautitlán Izcalli, Ecatepec, Huixquilucán, La Paz, Tlalnepantla de Baz, Tultitlán.
Third Ring:
DF: Milpa Alta. State of Mexico: Chalco, Chiautla, Chicoloapán, Chiconcuac, Cuautitlán, Ixtapaluca, Melchor Ocampo, Nicolás Romero, Tecamac, Tultepec.

The second change has been an acceleration in the pace of decentralization of population from the centre of the city towards more recently urbanized areas. Beginning in the 1950s, the Mexico City Metropolitan Zone has grown beyond the original boundaries of what is now referred to as the Central City (the present-day delegations of Benito Juárez, Cuauhtémoc, Miguel Hidalgo, and Venustiano Carranza) to include increasing numbers of delegations in the Federal District and municipalities in the adjoining State of Mexico (Garza and Schteingart, 1978) (figure 8.2). Three additional "rings" of settlement have been incorporated into Mexico City since that time (Negrete-Salas et al., 1993). The movement of population from the Central City toward the outermost rings began in the 1950s and accelerated through the following decades (Garza and Schteingart, 1978: 70). The bulk of the population now lives in the First and Second Rings, while the Second and Third Rings have been growing most rapidly. The Central City is in decline; its population in 1990 was only two-thirds of its 1970 total.

Figure 8.2 Mexico City: Administrative divisions

Trends in employment location in Mexico City

Garza and Schteingart (1978: 63) report that Mexico City's share of the country's industrial firms has been in decline since the early 1960s. Table 8.5 shows that industrial employment in Mexico City peaked around 1980, and has declined since then. Within the capital there has been a strong trend towards decentralization. Table 8.6 shows that the central city has been growing less rapidly than the outer rings ever since the 1960s, a process that intensified in the 1980s.

Table 8.5 Industrial employment by ring, 1960-1988

Sources: Derived from Garza, 1987, and INEGI, 1989.
a. For consistency with historical records, the municipalities of Huixquilucán and Chimalhua can have been excluded from the Second Ring data for 1985 and 1988, while Chiautla, Chicoloapan, Chiconcuac, Melchor Ocampo, and Tultepec have been excluded from Third Ring data for 1985 and 1988.

Table 8.6 Average annual growth rates in industrial employment by nag, 1960-1988 (percentages)

Sources: Derived from Garza, 1987, and INEGI, 1989.

a. For consistency with historical records, the municipalities of Huixquilucán and Chimalhua can have been excluded from the Second Ring data for 1985 and 1988, while Chiautla, Chicoloapan, Chiconcuac, Melchor Ocampo, and Tultepec have been excluded from Third Ring data for 1985 and 1988.

Not surprisingly, the most recent data show a pattern of employment decentralization within Mexico City similar to the movement in population. Table 8.7 shows that employment grew only in the Third Ring. There were large job losses in manufacturing in the Second Ring, but the commerce and services sectors recorded high growth rates, albeit less than those of the Third Ring. At higher levels of disaggregation some sectors did grow in the inner rings (for example wholesaling and some service sectors), but the general trend is for faster growth outside the central area.

Table 8.7 Average annual growth of employment by sector, 1985-1988 (percentages)

Source: Derived from INEGI, 1989.

Table 8.8 Metropolitan employment by sector, 1985 and 1988

Source: Derived from INEGI, 1989.

Examination of the changing shares of economic activity presents a less clear picture of decentralization (see table 8.8). Overall, the Third Ring increased its share of employment, but at the expense of the First and Second Rings rather than the Central City. While the Second Ring lost manufacturing employment to the First and Third, it gained in commerce and services. These apparently contradictory trends can be explained by the observation that between 1985 and 1988, the metropolitan area as a whole lost over 113,000 jobs in manufacturing - 5 per cent of its total employment in this sector.

Aguilar (1993) has documented this general pattern of spatial deconcentration in manufacturing between 1975 and 1985. Working with more highly disaggregated employment data, he shows how certain types of manufacturing and service activities are more likely to decentralize from the city centre than others. Firms serving local markets move out, presumably following the suburbanizing population while those with links to national and international markets are more likely to remain in the centre. He sees a resurgence of "high technology" industries, such as electronics, as well as printing and publishing in the central area, between 1975 and 1985. His disaggregated service-sector data show decentralization in consumer services, while business services remained in the central city.

Both the employment data and the population data tell the same story: Mexico City continues to decentralize rapidly. The doomsday scenarios regarding pollution, traffic congestion, and other problems associated with a large and concentrated population are being challenged by adjustments in patterns of economic activity in the metropolitan region and nationwide. However, a number of serious difficulties remain for the city in the areas of urban administration and finance, housing, urban services, air pollution, and traffic management.

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