During the 1970s, two large oil shocks created account deficits in several Latin American

countries, one of them being Mexico (Sims & Romero, 2013, p.1). Following on from this in 1982,
the consequent stagnations of Latin American economies during that period led to that decade
being called the lost decade (Agarwal & Sengupta, 1999, p.3129). This placed Mexico at the
central of international debt crisis (Ros, 1987, p.68). As a result of this Mexico was forced into a
series of drastic remedial measures which included an agreement with the IMF (Thorp &
Whitehead, 1987, p.1). The agreement consisted of the IMF pressuring Mexico to apply the
Structural Adjustment Programme also known as SAP, the SAP was a programme set up for highly
indebted countries such as Mexico, this programme allowed them to get a loan from the IMF.
However these loans were connected with conditions that Mexico had to agree to (Abugre, 2000),
these conditions included fiscal austerity, tight monetary policies, devaluation and a few others.
According to critics of the SAP such as Rodriguez (1992) the SAP was a failure due to the
persistence of high inflation, economic stagnation and the continued presence of large fiscal
imbalances. As a result of these issues, the SAP on a whole worsened poverty and also increased
inequality in Mexico (Morley, 1998, p.42).

Rather than enhancing economic stability, the IMFs structural adjustment programme in Mexico in
the 1980s intensified the financial crisis. This created instability within their economy and lead to
high levels of absolute poverty.

The IMFs role within the global financial system is still significant today, they are continuously
lending money to countries who have undergone or are still undergoing a financial crisis. For
example in 2010, Greece was admitted into the Economic Adjustment Programme which entitled
them to 110 billion on the basis that Greece implements the supporting economic policies given
by the IMF (European Commission, The Economic Adjustment Programme for Greece, 2010). The
results produced after the economic policies were implemented in Greece demonstrates the
similarities between the IMF policies of Mexico in the 1980s and those of the IMF post-global
financial crisis. This explains the importance of looking at this topic and examining the overall
effectiveness of the IMF and their programmes.

This dissertation has three research aims, the first research aim is to explore the event of the debt
crisis in Mexico during the 1980s. This is essential in understanding the overall impact that the
SAP had on Mexico. The second aim is to critically analyse the effectiveness of the IMFs
neoliberal policies after they were implemented in Mexico as part of the Structural Adjustment
programme. This links into the third aim which is to explain how these policies impacted indicators
of economic and social well being.

The Structural Adjustment programme was based on the Washington Consensus which is a set of
market based economic policies. The policies within the programme is underpinned by neoliberal
values such as privatisation, deregulation and fiscal austerity. In order to assess the effectiveness
of the SAP on Mexico, it is important to look at the theoretical framework behind it which is
Neoliberalism. In addition to this, this study will also look at the Keynesian approach which is
another theory that is essential in criticising the Neoliberal based programme. The Keynesian
approach criticises the IMF for attempting to apply free market policies on developing countries
and argued that the SAP may have been a lot more effective and beneficial for Mexico if it took a
more Keynesian approach.

This links into the Human Development theory which is another theory this study will use to critique
the SAP. The Human Development theory is essentially an alternative to the Neoliberal approach
which is essential for this study. The core argument of the Human Development theory is that
developing countries do not have to go through or deal with debt crises through Neoliberal ideas,
there are other alternatives. In order to clearly explain the impact of economic policies on Mexico
during the 1980s, quantitative data will used from the Human Development Reports. The data
retrieved will be used to compare and contrast levels of absolute poverty, GDP and levels of
inequality before and after the policies were implemented. The main research method that will be
used within the dissertation is secondary sources. This will include quantitative data such as
statistics from a range of databases and qualitative data such as publications; books and article for
the theories that will be discussed as mentioned before.

Each chapter will address or relate to the research aims that were stated. The first chapter will be a
theory chapter based on Neoliberalism, Keynesian and the Human Development approach as well
as a critique of the Washington Consensus. These theories and approach will be used to critique
the SAP in a more broader context as well as provide a foundation for the other chapters. The
second chapter will be split into two sections, the first part will provide brief background information
on the what had happened during the debt crisis, this includes the cause and the effect it had on
Mexico. The second half of the chapter will focus on why the IMF intervened in Mexico and
implemented the SAP, it will also include an analysis of the structural policies and how they were
underpinned by neoliberal values. In addition to this, it will assess the impact it had on the
economic and social conditions in Mexico during the 1980s using Keynesian and the Human
Development approach as criticism. The last chapter will provide a conclusion, reinstating the
overall argument linking it to how it is important today.