How would you like to have a really intelligent, honest and well educated president? How about a Harvard graduate? Well, would you believe that Mexico has a 12 consecutive year run of Harvard alumni presidents?
Prior to the new millennium, the Institutional Revolutionary Party (PRI) or its predecessor revolutionary parties had held power for over 70 years in Mexico and was a member of Socialist International. They promised to take care of and protect the poor; however after several decades in power, the PRI became the symbol of corruption and electoral fraud. La Mordida, or “the bite”, is the term for bribery in Mexico and was the traditional and customary way to get things done. Police and state bureaucrats made their living taking Mordidas which was the basis for corruption in Mexico. Thanks to the PRI philosophies toward nationalization, expropriation, authoritarianism, and state control of the economy, Mexico held a Third World status for 80 years. With those philosophies, Mexico was probably not the best place for foreigners to invest in real estate, or for that matter, anything else.
The situation in Mexico changed dramatically in 2000 when Vicente Fox of the National Action Party (PAN) first took over power for a six year presidential term lasting until 2006. Prior to his presidency, Fox had earned a Top Management Skills degree from the Business School of Harvard University and had then worked his way up to the presidency of Coca Cola Mexico and head of all Coca Cola Latin America.
While President of Mexico, Fox established a new Ministry of Security and Police, doubled the pay for police officers, and cracked down on crime by improving the Mexican judicial system which had been rife with corruption and ineptitude. The Human Development Index (HDI) is a comparable measure of life expectancy, literacy, education, and standard of living for countries worldwide. During Fox’s presidency, Mexico maintained an HDI of 0.8 which represents high development. In comparison, many countries such as Canada, France, and Great Britain, generated low increases and even some decreases in HDI figures. Real wages dropped 305% from 1976 to 1999, however since PAN has been in office, real wages have not only stabilized, but are starting to increase. Fox represented the Alliance for Change. He was one of the few Mexican presidents to avoid a major economic upheaval during office, whereas previously, the Mexicans were accustomed to devastating peso devaluations. During the ten years that we've lived in Puerto Vallarta, Mexico, the peso has held firm at about 10.8 pesos per US dollar.
Fox’s term expired in 2006, when his successor, Felipe Calderon, also with the PAN party, won a very close election. Calderon holds a Master of Public Administration degree from the John F. Kennedy School of Government at Harvard University, and will serve as President of Mexico until 2012. He supports balanced fiscal trade, flat taxes, lower taxes, and free trade. His motto is to Drive Mexico into the Future which represents privatization, liberalization, political freedom, and market control of the economy.
These two Harvard graduates have taken Mexico from a Third World Country to a Newly Industrialized Country (NIC) in a very short period of time and are continuing to advance the economy. As an NIC, Mexico has joined the ranks with countries such as China, India, Brazil, Turkey, etc. en route to becoming First World Industrialized Countries. Recently, Mexico has changed from being a beneficiary to a full contributor to the United Nations Development Program. The Mexican Bolsa, or stock market, has more than tripled during the ten years that we've lived in Vallarta.
The PRI party, still holds local power in the poorest states of Mexico; those where the inhabitants have the least education and are still waiting for subsidies from the government. However, the state of Jalisco where the capital is Guadalajara and the second largest city is Puerto Vallarta, is one of the many states where the local PAN party is in power. This change in power has been quite remarkable and evident in Vallarta during the last seven years. Mordidas are seldom seen anymore in PV because the public officials are not willing to jeopardize their decent paying employment for a small bribe.
The economy along the Mexican Riviera is booming today as an explosion of growth due to tourism and North American immigration has brought phenomenal amounts of money to the region. This in turn has created full employment of the locals and a very positive outlook for them as their standard of living constantly improves.
During the past seven years, the Mexican government has spent billions of dollars improving and upgrading the infrastructures throughout the resort destinations. Puerto Vallarta has new water treatment facilities, power distribution systems, hospitals, university, upgraded airport, maritime terminal, highway system, etc. and is being prepared for the next five years of growth.
We have owned property in Vallarta, located in the foot hills of the Sierra Madres overlooking Banderas Bay on the Pacific Ocean, for 24 years and have made Paradise our permanent residence for the past ten years. During the first 15 years, there were virtually no changes made here and the property values reflected it. However, during the years that PAN has been in power, the changes have been obvious and dramatic. Our villa has tripled in value and is expected to double again in the next five years as the baby boomers discover Paradise.
For any American or Canadian considering investments such as real estate in a foreign country, it’s imperative to understand the stability of that foreign government. Fortunately, Mexico has been governed by US friendly Harvard graduates for the past seven years and will be for at least the next five years, thus assuring a safe and secure investing environment for retiring North Americans. Apparently, politics can have an influence on Paradise!
