RESOURCE-BASED INDUSTRY IN BOOM, DOWNSWING AND LIBERALIZATION - MEXICO

Mexico's oil windfall was advantageously later and smaller than that of most oil exporters, but it was still absorbed too quickly. Inflation accelerated, the exchange rate appreciated and diversification into competitive non-oil tradeables, like resource-based industry (RBI) was retarded. Too much RBI investment was channelled through state enterprises whose performance deteriorated. It relied heavily on the protected domestic market which fell short of projections. Excess capacity and inadequate revenues then made RBI vulnerable as Mexico rapidly liberalized its economy in the late 1980s.