institutional and economic reforms in Brazil and Mexico

FT columnist John Paul Rathbone uses Brazil and Mexico as case studies to argue that economic reforms cannot bear fruit in a climate of corruption, insecurity and lawlessness.

While Mexico is far ahead of Brazil in the World Bank’s ease of doing business survey (at 39th position, ahead of Chile and Israel, versus 120th for Brazil), the opposite is true on the rule of law. Mexico, for example, ranks 103rd on Transparency International’s corruption perceptions index, worse than China, while Brazil at 69th position is level-pegged with Italy and Greece.

Mexico’s institutional rot seems to extend from top to bottom. The president has suffered a series of conflict of interest scandals involving his wife and finance minister. Journalists who report on disappearances and drug-fuelled violence, such as the presumed murder of 43 students last year, are themselves killed. This week, more than 500 intellectuals slammed Mexico’s “censorship by bullet”. While in Brazil criminals are being jailed, in Mexico drug lords can escape from high-security prisons through tunnels built into their cells’ showers. The government response to outcries after each shameful incident? Muted embarrassment and a business-as-usual attitude emphasising economic reform over the rule-of-law problems that are Mexico’s biggest concern.

What Mexico’s presidential palace does not seem to realise is that insecurity and lawlessness also have financial implications.

John Paul Rathbone, “Brazil cleans up its act, so should Mexico“, Financial Times, 21 August 2015 (metered paywall).

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