Mexico created the Federal Electricity Commission (CFE) in 1937 to organize and expand electric generation, transmission, and distribution. Reliable power was a basic requirement for industrial growth, and CFE became a central state-owned enterprise for infrastructure expansion. Its role grew over time as Mexico sought to extend electrification beyond major cities.
In the early 1940s, Mexico’s federal government began a more organized push to industrialize by producing more manufactured goods at home instead of importing them. This approach—often called import substitution industrialization (ISI)—used tariffs, permits, and public investment to expand domestic industry and reduce reliance on foreign suppliers. It set the stage for a larger state role in finance and infrastructure over the next four decades.
Altos Hornos de México (AHMSA) was constituted in 1942 as a steel company with both state and private capital, reflecting Mexico’s strategy of building “strategic” heavy industry. The project aimed to supply domestic steel for construction and manufacturing, reducing import dependence. It became one example of how the state and development finance supported industrial capacity building.
Mexico created the Mexican Social Security Institute (IMSS) by decree in 1943 to provide health and social insurance tied to formal employment. IMSS helped support the broader state-led development model by expanding benefits and services for urban workers. Over time, it also became an important public institution with major spending and investment needs.
In June 1944, AHMSA ignited its first blast furnace, marking the start of large-scale domestic steel production. Steel output supported Mexico’s ISI strategy by enabling more local production of machinery, transport equipment, and construction materials. This reduced some supply bottlenecks that had limited industrial growth.
In 1954, Mexico devalued the peso and then maintained a fixed exchange rate near 12.50 pesos per U.S. dollar for about two decades. The stable exchange rate supported the “stabilizing development” phase of ISI by encouraging predictable import costs for industrial inputs and supporting business planning. Over time, however, stability also helped hide growing fiscal and external pressures.
In 1960, Mexico nationalized the electric industry, strengthening the public sector’s control over electricity prices and expansion plans. This move aligned with ISI thinking: treat key inputs like power as strategic, with the state coordinating long-term investment. It increased CFE’s importance in Mexico’s state-led growth model.
Mexico created CONASUPO in the early 1960s to support food supply and stabilize prices for basic goods, especially corn. This parastatal (state-owned enterprise) fit the broader mixed-economy model by combining market activity with state intervention to meet social goals. It also increased the scale and complexity of government-linked enterprise management.
In 1976, Mexico abandoned the long-standing fixed exchange rate as the peso came under pressure, marking a major break from the earlier stabilizing phase. The shift reflected rising inflation, fiscal strain, and balance-of-payments problems (difficulty paying for imports and foreign obligations). This turning point set up a late-1970s pivot toward heavy public-sector spending supported by oil revenues and borrowing.
After major oil discoveries in the 1970s, the López Portillo administration pushed for rapid expansion of production and exports through PEMEX, the state oil company. Oil income and expectations of future revenue encouraged large-scale public investment and heavier external borrowing. This deepened the state-led model—but also increased risk if oil prices fell or credit tightened.
By mid-1982, Mexico faced severe liquidity problems and shrinking access to new loans, making it hard to meet scheduled debt payments. On August 20, 1982, international banks agreed to a short postponement of principal payments while Mexico sought broader restructuring. This was a key signal that the state-led, debt-financed expansion of the late 1970s had become unsustainable under changing global conditions.
On September 1, 1982, President José López Portillo nationalized Mexico’s private banks and imposed generalized exchange controls to slow capital flight and stabilize the currency. These actions represented a dramatic expansion of state ownership and control at the peak of crisis. They also marked the closing phase of Mexico’s classic ISI-era state enterprise model, as the country soon shifted toward stabilization and restructuring.
Mexico's ISI era and state-owned enterprises (1940–1982)