Important elections south of the border

Let’s start with Mexico, where the presidential election is being held on July 1st. Recent polling data show Enrique Peña Nieto of the Partido Revolucionario Institucional (PRI) as the frontrunner, collecting 40 percent of the vote. His opponents, Manuel López Obrador of the Partido de la Revolucion Democratica (PRD) and Josefina Vasquez Mota of the Partido Accion Nacional (PAN) garner 30 percent and 24 percent of the vote, respectively.
The disparity is newsworthy because it’s a drastic reversal of fortune for the PAN, the party that’s been in power since 2000. Depending on which of the two top candidates wins on July 1st, the change in power could mean a significant change in policy.
Broadly speaking, the differences between the PRI and the PAN during this election are not significant. Both parties’ political ideology is in the center, with the former leaning slightly left and the latter leaning slightly right. By contrast, the PRD—currently in 2nd place behind the frontrunner, and gaining in recent polls—has an ideology that’s best identified as far left.
Thus, having candidates from two starkly-different parties leading the presidential race means there’s considerable uncertainty regarding future economic policy in Mexico. For instance, should the PRD’s Lopez Obrador gain power on July 1st, it’s likely that state-owned enterprises like Petroleos Mexicanos will become less (rather than more) open to foreign investment. Mexico was 6th in the world in oil production last year, and such a development could have a dramatic effect at the price Americans are paying at the pump.
While Lopez Obrador denies that he’d follow a Hugo Chavez-style path of industry nationalization, concerns remain about the candidate that opponents have branded “a danger to Mexico.”
The Chavez brand isn’t only a liability in Mexico—it’s increasingly one in Venezuela itself, where elections are being held in October of this year. Chávez was elected in 1998, and this is the first election since then where the opposition has a strong chance of winning; recent polls show challenger Henrique Capriles Radonski with 46 percent support, to Chavez’s 51 percent.
Chávez’s statist policies have had significant negative effects on Venezuela’s economic and political systems, which have been increasingly difficult for even his loyal followers to ignore. And as the president’s health wanes, his forceful personality—which has proved such a valuable election tool in past years—will no longer be a political tool that helps cover over his policy failures.
This isn’t just beneficial for Venezuelans suffering under Chavez’s regime: Allowing more foreign investment in the state’s Petroleos de Venezuela—which Chavez won’t allow, but his replacement might—would lead to more efficient production of oil that can translate to greater supply and lower prices for Americans at the pump.
The elections in both countries will have a considerable effect on migrations flows, because economic policy in a specific country directly affects the well-being of its citizens. More prosperity in Venezuela would reduce Venezuelans’ desire to migrate to the United States; less prosperity in Mexico would mean the opposite. And though a change in leadership could mean deterioration in the US’ relationship with Mexico, it will almost certainly mean an improvement in our relationship with Venezuela, which could hardly be worse than it is now.
Americans can’t affect the elections in Venezuela and Mexico, but that doesn’t mean they should ignore them, because the results will impact our politics and our pocketbooks.
Blanco is assistant professor of economics in the School of Public Policy at Pepperdine University.