Lowering Barriers to Entry
There are small signs that Mexico's competition authorities are beginning to stand up to the rich and powerful bosses who have defied control for years. But the regulators have a hard battle ahead of them.
Mexico has a well-run economy. Its sound public finances,
low inflation and manageable external accounts won it an
investment grade credit rating in 2000. But the government of
President Vicente Fox wins few accolades for disciplining the
cartels and quasi-monopolies that dominate the country. Telmex
still runs the phones, Televisa and TV Azteca split control of
the television advertising market, and Bancomer and Banamex
control over half the banking system. Two beer companies -
Grupo Modelo and Femsa - brew nearly all the beer drunk in
Mexico. State-owned companies monopolize the electricity, oil
and gas. A state-owned holding company controls 75% of the
airline industry. This system of monolithic business empires
controlled by wealthy, politically powerful families and state
monopolies grew up in the second half of the 20th century when
the economy was sealed off from foreign competition and
investment. One would have thought that this had changed...
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