Mexico “Mostly Free”? Mexico “Mostly Prosperous”?: Uncovering shades of gray in the Freedom and Prosperity Indexes

Debate over the relationship between economic and political freedom and the prosperity of a society is not new. Scholars and policymakers have long questioned whether prosperity is the fruit or the seed of a free society. Are the two mutually determinant? In the long run can countries attain prosperity without freedom? Can freedom lead to an unprosperous society? In this context, the Atlantic Council’s Freedom and Prosperity Indexes are a powerful empirical tool, allowing us to consider these questions using reliable and comparable data. The Indexes have strengthened debate and interest over the relationship between freedom and prosperity in countries as varied as China, which they currently catalog as Mostly Free in economic terms but Unfree in political terms, and India, which is Mostly Unprosperous despite being Mostly Free in political terms. In these discussions the Indexes serve as key reference points to inform real-life policy debates and policy making.

Still, there are cases in which our understanding of the prevailing conditions in a given country can benefit from additional information. This essay uses the 2022 Freedom and Prosperity Indexes (“the Indexes”) to analyse the case of Mexico, a country currently catalogued as Mostly Free and Mostly Prosperous. It attempts to demonstrate how the Indexes do not yet capture certain dimensions of democratic retrenchment and institutional deterioration now being seen in countries across the globe. Some of these dimensions are easy to see, while others are more subtle. The goal of this paper is to demonstrate the benefits of and need for an early warning system that can enable a more accurate analysis of the decline in freedom and prosperity in certain countries. To that end, this paper attempts to provide a qualitative extension to the Index data, drawn from recent developments in Mexican politics, in order to examine essential nuances that lie beyond the country’s current categorization. This exercise is particularly relevant as Mexico has, since 2018, experienced a wave of populism and polarization that has proven detrimental to political and economic freedoms and, ultimately, to democracy itself.

It is important to note that Mexican democracy was far from perfect prior to 2018, the year in which the current government entered office on a single six-year term without the possibility of reelection. The country was facing profound challenges in the form of a culture of privilege, corruption scandals, and brutal inequality. However, it also enjoyed low but sustained economic growth, strong and well-managed public finances, and a clear route to unlocking higher productivity and achieving its full growth potential through sectoral reforms. But despite the expectations of many, Mexico has since 2018 seen a weakening of the rule of law and checks and balances, increased militarization of state functions, a lack of economic growth, and increased poverty levels. These trends in themselves constitute a worrisome backsliding of both freedom and prosperity.¹

By analysing the Mexican case, I will provide support for a better understanding of the correlation between these two factors and the potential risks to freedom, particularly in many countries that are considered Mostly Free.

The case of Mexico suggests that the Indexes’ methodology is indeed useful in identifying and weighing the elements that make a country free and prosperous, and in providing a sophisticated standard to compare countries around the world. However, it also highlights the need to understand and assess additional rele-vant trends in order to deepen the analysis beyond the Indexes’ primary results. Qualitative analysis of factors that point to the potential for an erosion of freedoms can enrich the definition of the Freedom Index’s four categories (Free, Mostly Free, Mostly Unfree, Unfree). For example, a Mostly Free country—the most common category among the 174 countries included in the Index—might very well be on the brink of becoming Mostly Unfree due to circumstances that are best understood when the Index is complemented with qualitative information.

Freedom, in the end, is fragile. Moreover, backsliding in democracy and freedom could well lead to a significant reduction in prosperity, whether as a result of a deterioration in the certainty that comes with clearly enforced laws and robust institutions, the diminished state capacity that institutional deterioration implies, or both. A closer look at a country’s particular features at specific moments will help us to better interpret the Indexes and render them even more useful. In sum, this essay aims to shed light on the shades of gray within the classification of Mostly Free countries of the Index and encourage analysts and policymakers to pay closer attention to countries when alarm bells over the future of freedom and prosperity start to sound.

Mexico: Shades of gray in freedom

Mexico ranks 82nd among 174 countries in the freedom component of the Freedom and Prosperity Indexes and is categorized as a Mostly Free country, with 58.2 points. But that aggregate score doesn’t tell the whole story about economic, political, and legal freedoms in Mexico today. When broken down by category, the Index ranks Mexico as 52nd in economic freedom (77.3 points), 88th in political freedom (60.8 points) and 122nd in legal freedoms (36.4 points).² A complementary qualitative analysis of recent political developments in Mexico allows us to better understand the processes taking place behind the scenes of the Index’s aggregate data. Facts on the ground suggest that freedom in Mexico is at risk due to an overt attack on institutions, checks and balances, and the rule of law. The Mostly Free tag should thus be interpreted with caution. To better understand why, it is necessary to look closely at the change of government in 2018, and what has happened since.

In July 2018, Andrés Manuel López Obrador, widely referred to as AMLO, was elected president after three decades of political activism that turned him into the most well-known social leader in the country. While he was elected on the promise to “end corruption” and deliver well-being, or bienestar, he notably did not promise to protect individual freedoms or emphasize the importance of the rule of law. In fact, his view of checks and balances had been revealed years earlier in what became a common refrain in his speeches and at campaign stops, referring to what he called the “abusive and neoliberal” administrations of the past: “To hell with their institutions!”³

As president, López Obrador has also increasingly resorted to a narrative that minimizes the importance of economic growth and instead emphasizes the relevance of “happy people.”⁴ In his binary milieu—characteristic of populist leaders—there are “the people” on one hand, who he says he represents and defends, and the political and economic elites on the other, who he characterizes as “conservative,” “neoliberal,” “racist,” and “classist.”⁵

It is important to recognise that AMLO came to power in a social environment marked by profound disenchantment with democracy and the political and economic elite that had governed the country for the previous thirty years. The period between 1988—when Mexico’s democratic transition began—and 2018 was driven by a strategic vision shared by successive governments that consisted of integrating the country with the world economy (mainly via North America); allowing privatization in key sectors such as banking and telecoms; developing independent and technical bodies to provide checks and balances; and framing a nascent multi-party and pluralistic democracy based on institutions, laws, and regulations.

Although Mexico did indeed profoundly reform its economic, political, and social landscape for the better, a series of significant failures that excluded large portions of the population from prosperity and allowed ample space for corruption and abuse created both enormous disparities and widespread resentment.

AMLO’s polarizing discourse capitalized on built-up anger and frustration, and he won a landslide victory in the 2018 presidential election. López Obrador gained more than twice as many votes as his closest challenger, with a record-breaking 30 million votes in a country of 130 million inhabitants and 56 million voters.⁶ The scale of the mandate allowed AMLO to deploy an ambitious government plan that has, in many ways, negatively affected the environment for freedom and prosperity.

A first step came before AMLO came to power. On October 29, 2018, the then president-elect announced that he would cancel the ongoing construction of a new airport in Mexico City, a flagship project of the previous administration that, according to López Obrador, embodied the corruption of the “neoliberal” regime.⁷ To support the cancelation, AMLO’s party, MORENA (National Regeneration Movement), organized a public consultation to ask citizens if they agreed with the decision. This marked the beginning of the administration’s habit of disregarding existing laws and regulations, and it happened before López Obrador was even sworn in on December 1. For its survey, MORENA decided not to abide by the Federal Law on Public Consultations which, among other things, mandates that public votes be conducted by the National Electoral Institute (INE) in order to be binding. Instead, a “citizen council” was put in charge of the vote, with funding left to “voluntary contributions,” mainly from legislators loyal to the president-elect. Despite the fact that less than 1 percent of Mexicans participated in the exercise, the future government proclaimed that “the people” had spoken in favor of canceling the airport.

The political goal of the episode was to send a strong message that previous economic and political elites were no longer in charge, and that even large-scale and well-advanced projects could be canceled at the new regime’s whim, without concern for existing laws or market expectations. The cost of canceling the airport—which had been under construction for at least four years by that point—has been estimated at 126.7 billion Mexican pesos (approximately US$6.3 billion).⁸That doesn’t include the opportunity costs in terms of development potential that such a large-scale project could have delivered for a globally integrated economy such as Mexico’s, the fifteenth largest in the world. Before changing any law and prior to assuming power, the new government had already seeded uncertainty and damaged trust among domestic and international private sector actors. This event, on its own, will have lasting and damaging effects on investment decisions for Mexico, a key determinant of present and future prosperity. The cancelation of the airport was likely one of the reasons that in 2019, López Obrador’s first year in office, Mexico’s long-term trend of low but constant economic growth was disrupted. The country’s economy contracted by 0.2 percent that year, even before COVID-19 started to affect the situation. Moreover, by throwing away public resources already invested in the airport and demonstrating that contracts could be broken at will, it became clear from the start that the rule of law in Mexico was under serious attack, and that economic uncertainty would be the order of the day. It should come as no surprise that, according to data from INEGI—Mexico’s National Statistics Institute—private investment in the country has stagnated since 2018, as fixed gross investment was 11 percent above its 2013 level in July 2018, and it now stands 12 percent below.⁹ The downward trend started well before the pandemic hit and the country’s investment has not yet recovered.

After the new government took office in 2018, a process to capture or diminish the power of autonomous institutions, the main checks and constraints on presidential power, began. Over the course of Mexico’s democratic evolution, a number of autonomous and technical institutions have been created to serve a wide range of functions and goals: quality statistical and geographical information (National Institute of Statistics and Geography, INEGI); the organization of free and fair elections (Federal Electoral Institute, now INE); safeguarding human rights (National Human Rights Commission, CNDH); ensuring transparency and accountability (National Institute for Transparency, INAI); regulating markets with technical autonomy (Federal Economic Competition Commission, COFECE; Federal Telecommunications Institute, IFETEL; and the Energy Regulatory Commission, CRE, among others); and ensuring purchasing power stability (Central Bank, Banxico, which was granted autonomy in 1994). The new regime well understood that these institutions were put in place to limit power, to create boundaries for government action, and to offer technical considerations for the regulation of markets. To weaken many of these and other autonomous agencies, López Obrador has used his legislative majorities to appoint unfit loyalists to lead some of them or fill vacancies on their boards, hobbling their institutional and decision-making capacity.

These steps have already had significant effects. For example, a truly independent Human Rights Commission¹⁰ would have scrutinized the creation of a new Guardia Nacional (National Guard), under the command of the military, meant to control public safety. This key project of López Obrador’s contravenes the civilian nature of the Mexican state and is now being challenged in court as unconstitutional.¹¹ As a further example, López Obrador has de facto eliminated private sector investment in the energy sector, especially in clean energy and oil exploration and extraction partnerships, a move that is being challenged by the United States and Canada within the United States-Mexico-Canada Agreement (USMCA) dispute-settling mechanism.¹² This could have been prevented if COFECE and CRE had been allowed to maintain their autonomy, independence, and respect. Another strategy to prevent the proper functioning of independent agencies has been to leave vacancies open without making new appointments. In fact, in November 2022 the Mexican Supreme Court ruled that the failure to name candidates to lead COFECE was in violation of the constitution.¹³

The administration’s efforts to either eliminate or co-opt the sources of control on its power are evident enough,¹⁴ but perhaps too subtle to capture on a quantitative index. Changes in the way institutions are formed and operate affect the way freedom is experienced on a daily basis by both the Mexican people and stakeholders with interests or investments in the country. But these issues are often not reflected in constitutional or legal changes that can be easily identified. Instead, they are part of a series of new practices, and a political environment that favors discretion and personal politics over the predictability of laws and institutions.

Furthermore, the relationship between Mexico’s three branches of government (executive, legislative, and judicial) suggests that checks and balances on presidential power are weakening across the board. AMLO has attacked the autonomy of the Mexican Supreme Court, made questionable appointments to the bench, and even publicly acknowledged that he has exerted pressure on the court on a range of issues in an effort to tip the scales in favor of the government’s interests and vision.¹⁵

Meanwhile, MORENA and its allies, the Labour Party, Green Party, and Social Encounter Party, have enjoyed a comfortable majority since 2018 that allows them to modify laws and regulations and to approve the annual budget without support from the opposition. Mexico’s legislature had actively served as a check on presidential power since 1997, when Ernesto Zedillo became the first president whose party did not have a majority in Congress. Today, it has been relegated nearly to the role of rubber-stamping the administration’s proposals. The most consequential pieces of legislation over the last four years have been drafted by the government and approved by Congress “without changing a comma,” in accordance with López Obrador’s wishes.¹⁶ The only backstop has come in the Senate, where the president lacks the supermajority needed to change the constitution without help from opposition legislators.

In the context of scarce and increasingly expensive capital to finance development projects, which are essential for the creation of prosperity, the budgetary freedom that the government enjoys as a result of its congressional majority has enabled it to prioritize three pet projects: the Tren Maya, the Refinería Olmeca, and the AIFA airport. All three projects merit serious scrutiny in terms of their financial sustainability, contract transparency, and environ-mental impact.

The Tren Maya (Mayan train), originally budgeted at US$6 billion, is now expected to cost around US$15 billion and rising¹⁷ and has raised concerns over the potential destruction of the Mayan rainforest, significant environmental damage to its ecosystem, and the threat it poses to both local communities and travelers, given the fragile underground system of caves and rivers that lies under the Yucatán peninsula.¹⁸ Despite the fact that the train project lacks legally required environmental assessments, and that the courts have ruled in favor of suspending construction on several occasions, the government has used legal sleights to continue building. Compounding the problems, a number of private investors withdrew their support for the project, assessing it to be financially unviable. This is why Tren Maya has become a “pet project,” funded by tax resources.¹⁹

The Refinería Olmeca (Olmec refinery), an oil processing facility built over a swamp in the president’s home state of Tabasco, was inaugurated before it started to function, and has flooded every time a strong storm washes over the region. As of October 2022, the project was 46 percent over budget and has yet to refine a single drop of oil.²⁰ The AIFA airport (Felipe Ángeles International Airport), meanwhile, was built by the military with little to no transparency, was exempt from public procurement regulations, and is a long way from proving itself either operationally and economically viable.

When looking at how free Mexico really is, the significantly increased role of the military in public life is also worth consideration. Giving the armed forces the power to participate in a wide range of productive activities, in addition to control over domestic security, is in direct conflict with Mexicans’ fundamental freedoms. For almost the last century, Mexico’s military has been in charge of national security and helping respond to natural disasters such as earthquakes and hurricanes. This has been in keeping with the role assigned by Mexico’s constitution to the country’s Secretariat of Defence (SEDENA) and Navy (SEMAR). Starting with President Felipe Calderón (2006–12) and through President Enrique Peña Nieto’s term (2012–19), the military also collaborated with civilian authorities in limited ways to ensure public safety, especially in operations to capture drug kingpins and destroy drug labs or plantations. This was done under a temporary legal exception, the constitutional support for which was questioned by advocacy groups that were hopeful the military’s role in public safety would end under AMLO’s leadership. However, despite running a campaign that promised to “return the military to the barracks” and “strengthen civil police and security agencies,” the president has dramatically changed his position since coming to office.²¹ The military has taken over responsibility for public safety through the newly created Guardia Nacional and has expanded its influence into other areas that were previously reserved either for the private sector or the government. Today, the military controls ports, customs screenings, and airports; builds infrastructure projects such as the Tren Maya and the AIFA airport (the latter is also operated by the military); has built over 1,000 community bank branches; distributes gasoline, gas, and fertilizers; prints textbooks for public schools; detains migrants from Central America on their way to the United States; and may soon be running a commercial airline company “to lower costs.”²² And these are just some of the dozens of functions assigned to the military that have been documented by civil society organizations and which are legally intended to be in the hands of civilian agencies.²³ Moreover, given the secrecy that protects so-called security tasks from scrutiny, the military has been able to withhold important information about all its activities, including its budget allocations. The military has thus operated with little to no accountability, affecting the rule of law. Here the Mostly Free tag clearly starts to crack.

When faced with criticism and questions from the media and civil society, the president has resorted to direct, personal attacks questioning his critics’ legitimacy and intentions. He has called out journalists by name, and even exposed the confidential tax information of those who confront him.²⁴ Before the administration assumed office, Mexico was already one of the most dangerous countries in the world for journalists.²⁵ But the intimidating environment for media and critics has only gotten worse. Those who oppose the government are referred to as “adversaries,” or “los conservadores” (the conservatives), and deemed ultimately corrupt, delegitimizing them as valid interlocutors. Time and time again, those who do not subscribe to the president’s thinking have been referred to as “enemies of the people,” “racist,” “classist,” “aspirational,” “hypocrites,” “angry,” and even “fascists.”²⁶ This level of confrontation on a daily basis (the president addresses the media every morning in rambling press conferences) has a clear “chilling effect” on freedom of speech.

Mexico: Shades of gray in prosperity

Given all the above, it is clear that the Indexes do not fully account for the fragility of freedom in Mexico—and all the ways it has been undermined in recent years. A similar, though less extreme, dynamic can be seen in the Indexes’ view of Mexico’s prosperity. Here, Mexico is considered a Mostly Prosperous country, ranking 53rd out of 174 countries. Broken down by category, Mexico ranks 64th in income, 69th in environment and 78th in health. So where does the 53rd position come from? Mainly from happiness.

According to the Prosperity Index’s measurement, Mexicans are relatively happy, with a score of 71.4 (37th out of 174 countries). This result is not surprising, considering historical measures of happiness in the country derived from culture, social structures, and family safety nets.²⁷ But again, disaggregating the elements of prosperity helps shed light on important nuances.

The pandemic hit the world’s economy in an unprecedented way, and Mexico was no exception. But Mexico’s decline in growth began before the pandemic, as did the negative follow-on effects of that lack of growth, including increased poverty, reduced access to healthcare, and decreased private investment. On most indicators, Mexico has not yet returned to its pre-pandemic levels.

Source: Compiled by the author with data from INEGI (“Producto Interno Bruto Trimestral,” Instituto Nacional de Estadística y Geografía (INEGI), https://www.inegi.org.mx/temas/pib) and CONEVAL (“Pobreza en México,” Consejo Nacional de Evaluación de la Política de Desarrollo Social (CONEVAL), https://www.coneval.org.mx/Medicion/Paginas/PobrezaInicio.aspx).

As is usually the case when approaching social science questions, proving causation here may not be feasible. Are the negative outcomes a direct result of the erosion of the rule of law and the environment of uncertainty that Mexico has experienced since 2018? It is difficult to prove. But if wealth creation is a prerequisite for better wealth distribution, the negative average growth rate of the last four years would suggest that increased poverty levels—and thus a lack of prosperity in absolute terms—are at least in part the product of a deterioration in individual freedoms, democratic retrenchment, and the resulting damage to government capacity and private sector certainty, both of which are essential for social progress and economic prosperity. The government has tried to blame the pandemic,²⁸ the war in Ukraine, inflation as a “global phenomenon,”²⁹ and even the Mexican Central Bank³⁰ for sluggish growth and the increase in poverty during its administration. But what is clear is that the country is today less prosperous than before December 2018.

To be sure, this worrying trend is also revealed by a wider look at variation in the Indexes over time. Mexico’s freedom score in 2021 was 58.2, down from 59.4 in the previous measurement (2016). Mexico’s prosperity score in 2021 was 58, down from 60.7 in 2016. Hence, even if Mexico is categorized as a Mostly Free, Mostly Prosperous country, it is on a downward trajectory, and one that could worsen abruptly over the next few years if the rule of law continues to deteriorate and if an increasingly authoritarian regime advances further. When compared with the rest of the world’s economies, Mexico is a clearly middle-income country, the fifteenth largest economy in the world, and a member of reduced-membership organizations such as the G20 and the Organisation for Economic Co-operation and Development (OECD). But a closer look at relevant data—economic growth, inequality, income, extreme poverty, poverty, and access to basic rights and services, such as food and nutrition, health, education, social security, housing, and housing quality and services (electricity, water, sewage, overcrowding)—also supports the notion that prosperity in the country is deteriorating.

Populism pills for Mexico?

At first sight, it appears that Mexico’s light green colouring on the Freedom and Prosperity Indexes map is a positive sign. In digging deeper into recent political and economic trends, this paper aims to ask new questions raised by additional qualitative information. The Indexes are more relevant than ever, not only for Mexico but for the world. When accompanied with an in-depth analysis for each country that can add a prism through which to view the Indexes’ numbers, they can serve as even more powerful tools for analysis, decision making, and advocacy. Given the reality of what is taking place in Mexico, in analysing the country one needs to ask not just how prosperous or free it is today, but how likely it is that the country could fall into the Mostly Unfree and Mostly Unprosperous categories in the near future.

Mexico is a large economy that is now fully integrated into North American value chains and, from there, with the world’s value chains. Its public finances are strong, and its fiscal stance is on a sustainable trajectory with a debt-to-GDP ratio below 50 percent. Macroeconomic variables look good despite obvious economic stagnation. Mexico is also a resilient democracy, with relatively free and fair elections organized by a still independent electoral authority, though this could become significantly weaker following reforms passed by the government at the end of 2022, which will be contested at the Supreme Court of Justice. But Mexico, like many other countries, is trapped by polarization and populism. And while populism might be producing immediate relief for some—as can be seen in the high approval rates of the president and high happiness measure in the Prosperity Index—these conditions will ultimately lead to long-term structural damage that will take decades to overcome. Constant deterioration of the rule of law and the concentration of power since 2018 has put Mexico on a slippery slope on which the norms and institutions that have sustained our economic and political freedoms could suffer deeper damage.

Still, one needs to reckon with the fact that 60 percent of Mexicans approve of López Obrador’s actions.³¹ Despite the weakening of the institutional and democratic landscape and poor economic performance (this government is in fact likely to be the worst performer in terms of growth in the last forty years), many people are unbothered by the negative results because they have taken populism’s “poisoned pill”: an appealing narrative that vindicates those who have been left behind, those who legitimately aspire for a better life for themselves and their families, those who are rightfully distrustful of the government given historical wrongs, and those who now receive larger subsidies from the government. AMLO is an exceptional social leader capable of speaking to a wide audience, and he connects emotionally with his political base like no other Mexican president in recent history. People relate to his simple “us vs. them” dichotomy. While there are strong arguments pointing to the current government’s shortcomings in terms of performance, few can deny that the president is quite a successful politician.

What is worrisome is that more and more leaders around the world have been elected in free and fair democratic processes, only to incrementally undermine institutions, consolidate power, and grow more authoritarian once in office. This is precisely why further data and analysis of trends and nuances are often a necessary complement to the Indexes. While Mexico is still classified as a democracy—and still is one—there exists a latent risk of the country becoming just a democratic facade in front of an autocratic regime. For anyone looking at the Freedom and Prosperity Indexes in the future, the lesson this paper intends to share is that, for many countries, freedom and prosperity are still fragile ideals that depend on a series of conditions that must be constantly upheld. Some of these might be obvious, but others are quite subtle and evolve in ways that are barely visible to an outside eye. It is thus important to complement the Indexes with layers of qualitative analysis that better detect when significant fractures are appearing in a system, before a country and its citizens suffer significant reversals in freedom and prosperity, or a return to the dark era of authoritarianism. We need to measure in order to understand, understand to advocate, and advocate in order to change for the better.

Vanessa Rubio-Márquez is a former senator and deputy minister in the Mexican government.

Image: A Mexican Red Cross nurse receives a booster shot of the AstraZeneca coronavirus disease (COVID-19) vaccine, in Ciudad Juarez, Mexico January 6, 2022. REUTERS/Jose Luis Gonzalez

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