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4. Economic System4.1. Recent Economic HistoryDuring more than 50 years of adhering to an economic policy of import substitution,conceived in the fifties by the United Nations Economic Commission for Latin America,Mexican trade was closed to the outside world, which was very beneficial politically forthe party dictatorship of the period.Under the economic model of import substitution, a broad industrial infrastructuredeveloped, a large part of which ceased to be efficient, to the extent that the Mexican productsmade for the protected internal market were not internationally competitive, with asmall number of exceptions. In addition, as this model ran its course, cyclical economiccrises arose more and more frequently. By 1986, it was necessary to change economic policyand to open up the system, for which purpose the Mexican government joined theGeneral Agreement on Tariffs and Trade (GATT). In 1994, the North American Free TradeAgreement (NAFTA) was signed, which was followed by the signing of other free trade andinvestment protection agreements with a broad range of countries from all parts of theworld, including a Free Trade Agreement with the European Union.In anticipation of the signing of NAFTA, while the governments of Carlos Salinas deGortari (1988–1994) and Ernesto Zedillo (1994–2000) were in power, the trend towardopening and privatizing the economy intensified, especially in the banking, finance, andtelecommunications sectors, including railways, airlines, airports, highways, and othersectors that have contributed to the development of modern Mexico. At the same time,the signing of NAFTA was the beginning of the reentry of Mexico into the world economy.One of Mexico’s first steps following the signing of NAFTA was joining the Organizationfor Economic Development and Cooperation (OECD) and the development of a moreactive role for the nation in international economics and policy.33Profile of the Country4.2. Fundamental Economic IndicatorsCurrently economic activity in Mexico is going through a stage of relative stability, butwith the possibility of being affected by the crisis in the U.S. real estate sector caused bythe granting of subprime mortgages and a housing bubble, which has generated anincrease in interest rates that has caused a number of important debtors to enter intobankruptcy proceedings. Recently the U.S. government announced a freeze on interestrates, and it remains to be seen whether or not it will produce the hoped-for results tocounteract the current conditions. Notwithstanding the above, it is hoped that the elevatedinternational price of oil and other raw materials will favor the increase of petroleum,extractive, and agricultural exports, which would continue stimulating the foreign