Oil and World Power. The 1980s and the International Debt Crisis

The 1980s were the result of the organizational design and rearrangements that took place in the 1970s in both countries. The distinctive feature of this decade was an economic crisis in the region that resulted from the sovereign debt of many countries and the surge of the international interest rates, accompanied by a deterioration of the terms of trade of some commodity exporting nations. In fact the crisis was so severe in Latin America that the period is better known as the “lost decade” to illustrate the stagnant growth rates of most countries in the region. In Mexico the economic crisis was partly the result of the sudden increase in the international interest rates, capital flight, the foreign debt, and concentration of income. To solve some of these problems, the Mexican government relied on oil exports to obtain foreign exchange and service its debt obligations, as well as to cover the costs of some strategic imports (Randall 1989, 132). The debt of the government had increased from 46.6% in 1960 to an outstanding 292.2% in 1982, attributable mainly to infrastructure and expansion projects initiated during the period of oil abundance of the 1970s. In fact, great part of the debt was directly acquired through Pemex, because it provided less credit risk than the Mexican government because the company was able to back its credits with oil (Randall 1989, 22)