Methodological Perspective: History of Economic Thought and State-building

The analysis is grounded in the history of economic thought, here focused on the way the political center—through its own formative process—conceptualized its economic functions. In the classical sense of the field, the history of economic thought does not merely reconstruct policies or outcomes; it identifies the notions, through which a given period understands and orients its economic life. As Schumpeter suggests, economic thought may be understood as the “sum total of opinions and desires concerning economic subjects,” especially those related to economic policy that circulate in the public sphere and may crystallize into systems of political economy, whereas economic analysis refers to the intellectual efforts to understand economic phenomena through schemes and concepts (Schumpeter 1954, 9). In this article, my primary interest is in state economic thought, that is, the ideas, legitimacy criteria, and practical categories through which the postrevolutionary political center conceptualized its economic function, justified intervention, and defined development in national terms.

Along the same lines, the article adopts an approach that links ideas to their historical conditions of emergence. Economic notions take shape in relation to concrete problems and pressures (crises, distributive disputes, institutional construction) and become intelligible when we reconstruct the socioeconomic and institutional context in which they are produced. For this reason, laws, annual reports, decrees, speeches, and plans are examined as intellectual artifacts: texts that fix diagnoses, rank objectives, define instruments, and delimit relevant economic subjects (workers, ejidatarios, industrialists, banks), thereby revealing a state economic rationality in formation.¹

The article also draws on a historical-sociological perspective that makes it possible to observe how the process of post-revolutionary state (re)construction shaped economic action and, in turn, how economic action reinforced state legitimacy. In this framework, development is not understood as a static goal or as a set of imported policies, but as a historical process of state organization endowed with a specifically national meaning.

To advance this claim, the article combines a theoretical and an historical framework. Section 2 presents the categories employed to conceptualize early Mexican developmentalism, discussing developmentalism as a historical modality of the capitalist State rather than merely a postwar doctrine. It recovers the intellectual matrices of economic nationalism and revolutionary thought as foundations for the legitimacy of state economic action.

Section 3 proposes a historical framing of the period 1917–1941. Subsection 3.1 examines the ideas that emanated from the 1917 Constitution, their associated policy instruments, and their concrete implementation in matters of agrarian reform, the social function of property, labor protection, fiscal reorganization, and the first initiatives to build a national financial infrastructure. These measures laid the groundwork for an economy oriented toward social welfare and the strengthening of the domestic market.

Subsection 3.2 analyses how, between 1932 and 1941, the monetary and financial architecture of the Mexican State was reconfigured. It examines the insufficiency of the orthodox framework of 1931; the reforms to the Banco de México; the growing coordination between fiscal and monetary policy; and the expansion of public credit, culminating in the legislative package of 1940–1941—especially the new General Law of Credit Institutions and the organic laws of Nacional Financiera and the central bank—that definitively shaped the developmental uses of public credit.

Subsection 3.3 then focuses on the consolidation of a political center capable of steering the national economy during the biennium 1932–1934. It analyses the initiatives of President Abelardo L. Rodríguez’s administration, among them the creation of refurbishment banks and new economic agencies; the administrative reorganization that led to the Ministry of National Economy; cooperative policy; the assertion of economic sovereignty through PETROMEX and the establishment of a minimum wage; and the fiscal and treasury reforms that expanded the State’s capacity to channel resources toward projects of national interest. This moment—usually less studied—is interpreted as the proto-platform of the Mexican developmental State, where state capacities to plan, finance, and regulate economic activity were consolidated.

Finally, Section 4 synthesizes the article’s main findings and restates the core claim that early Mexican developmentalism emerged as an endogenous state economic rationality—rooted in economic nationalism and revolutionary thought—prior to postwar structuralism, and that this formative trajectory helps explain the later continuity of the model.

2.1 Developmentalism as a Historical Modality: State Action, National Projects, Social Coalitions, and Economic Rationalities

Debates on Latin American developmentalism have tended to locate its origins in the postwar period, closely associated with structuralist thought and with the institutional architecture built around the United Nations Economic Commission for Latin America (ECLA/CEPAL). This perspective, however, obscures a more basic point. Developmentalism is not only a technical doctrine or a homogeneous policy package, but a historical modality of the capitalist State that emerges when specific social coalitions identify economic development as a national objective and assign the State an active role in its pursuit. From a history of economic thought perspective, this debate is best addressed by reconstructing how the national economy was conceived and what ideas made an expansion of the State’s economic functions plausible. As Roll (1973) emphasizes, economic ideas bear complex relations to practice, being nourished by institutional structures, conflicts among groups, and real problems, and in turn they shape the course of economic policy. Hence, the question of early Mexican developmentalism requires tracing the period’s normative principles (sovereignty, welfare, social function), its diagnoses (a weak domestic market, insufficient credit, deflation), and the instruments conceived as legitimate (planning, public banking, regulation, state enterprise) in both discourse and institutional devices. This shift makes it possible to see developmentalism as a state economic rationality before it became a stabilized doctrine and helps explain why Mexico exhibits an earlier trajectory than the one conventionally associated with the postwar era. It should be clarified that this article does not project a later category onto the past but reconstructs the internal logic of state action as it was historically configured, without requiring that actors of the period had employed that term.

In his historical reconstruction, Bresser-Pereira (2017) characterizes the developmental State as one in which an industrial bourgeoisie, a professional economic bureaucracy and nationally oriented urban workers converge in a political coalition that understands capitalism not only as competition among firms, but also as competition among nation-states that must define strategies to raise productivity, promote structural change, and improve living standards on a sustained basis. From this perspective, developmentalism entails a reasoned economic nationalism, active macroeconomic policy and the recognition that capital accumulation and industrialization require instruments of state coordination.

Complementarily, Urquidi (1993) defines developmentalism as a state-led will to transform economic structures, expressed in the expansive use of public expenditure, state entrepreneurship, deliberate intervention in money and credit, and the expansion of physical, productive and social infrastructure. This will, he argues, arose in Latin America before CEPAL’s systematization of structuralism, as a response to the structural vulnerability of primary-export economies and to the political need to broaden social and economic opportunities. For Urquidi, developmentalism also implies a redistributive commitment oriented towards generating benefits for lower-income sectors, even when it operates in authoritarian institutional contexts and under tight fiscal or monetary constraints.

To these formulations I add the lens of the historical sociology of the State (Vargas Escobar 2013), which allows developmentalism to be understood as a form of state economic action emerging from a broader process of institutional construction. In this view, economic development is not a spontaneous outcome of markets, but the product of the consolidation of a political center capable of steering the national economy, organizing public investment, regulating financial flows, and articulating a domestic market able to sustain industrialization. State economic action thus acquires structural meaning, transforming the economy while simultaneously reinforcing the bases of state legitimacy by linking development to welfare, social cohesion, and territorial integration.

Early Mexican developmentalism can therefore be seen as the result of the convergence between an economic-nationalist project and a revolutionary tradition that linked development to social welfare, within a broader process of reconstruction of a political center strong enough to intervene in and orient the national economy. This convergence gave shape to a specific historical variety of the developmental State. It is a State that coordinates fiscal and monetary policy, makes systematic use of public spending, planning, state enterprises, and regulation to transform the productive structure, and orients these interventions toward strengthening the domestic market and raising living standards. It is not, therefore, a late model imported in the postwar period, but an endogenous process, rooted in the legacy of the Revolution and consolidated institutionally during the 1930s—particularly between 1932 and 1934.

At this point, Fajardo’s recent contribution is especially useful. She shows that, before the creation of CEPAL, there already existed in Latin America a political and economic imaginary of development, formed through a set of institutional practices, technical diagnoses, and public debates on development policy, which shared core elements with later structuralist formulations, among them an active role for the State, import-substituting industrialization and criticism of the region’s peripheral insertion in the international economy (Fajardo 2022, 29). From the 1930s onwards, several Latin American countries experimented with state intervention and industrial promotion policies that already conceived development as a historical and political project, based on the conviction that underdevelopment was structurally linked to the region’s position in the world economy. CEPAL, Fajardo (2022, 36, 50) argues, did not “invent” structuralism; rather, it gave it institutional form and regional reach.

Seen from this angle, the Mexican case appears not as a passive recipient of postwar structuralist ideas, but as one of the trajectories that anticipated and materialized many of the practices and principles that CEPAL would later theorize. The policies of intervention, planning, regulation, and industrial promotion that took shape between 1917 and 1941 provided a fertile ground on which an early variety of the developmental State could emerge.

CEPAL’s intellectual systematization from 1949 onward makes the contrast with Mexico’s earlier developmental rationality analytically precise. CEPAL’s doctrine rested on four interrelated propositions (Hirschman 1971, 281–284): that the gains of trade are distributed unequally between center and periphery; that income elasticities of demand are structurally asymmetric—the periphery’s demand for manufactured imports grows faster than the center’s demand for primary products; that protection performs a categorically different function in underdeveloped economies, where any expansion of industrial output represents a net addition to total product given disguised agricultural unemployment; and that import substitution therefore requires active planning and cannot be left to market forces. What these propositions share—and what distinguishes them from earlier economic-nationalist thought—is that they offer a systematic theoretical account of why peripheral economies cannot develop through market mechanisms alone. They do not merely prescribe intervention but explain its structural necessity.

The very genesis of that theory is revealing. The ideas about external strangulation and the deterioration of the terms of trade had been forming in the practice of monetary and exchange-rate management before being systematized in writing in 1949 (Prebisch 1963, ix–x). This practical origin matters because the Mexican trajectory reconstructed in this article also draws on the experience of state financial management. The difference lies in what was done with that experience. In the CEPAL case, a transferable theoretical framework was built—essentially inductive, historical-structural, designed to analyze the imbalances typical of peripheral economies—with capacity for regional application (Villaverde and Rêgo 2021, 357). In Mexico, the urgencies of postrevolutionary reconstruction did not demand that systematization since state intervention was legitimized by revolution and economic nationalism rather than by a structural theory of peripheral capitalism.

Development theory cannot be contained within the categories of strict economic analysis but requires reconstructing the concrete historical and social conditions governing factor combinations and productivity growth (Furtado 1953, 285–287). Mexico’s state economic rationality was precisely that: a historically situated set of diagnoses, legitimacy criteria, and practical categories through which the postrevolutionary center conceptualized its economic function. What CEPAL added was not the practice of intervention but its theoretical justification and, crucially, a programming methodology that translated structural analysis into investment targets and sectoral projections (Hirschman 1971, 285–287). Mexico already possessed, before any of this was theorized, the legal instruments of economic sovereignty, the apparatus of public credit, state enterprises, and the normative framework that made intervention legitimate in national terms. The Mexican variety of developmentalism was a state economic rationality in formation: it built the foundations for intervening—through constitutional law, revolutionary ideology, and economic nationalism—before a structural explanation existed for why that intervention was economically indispensable for any peripheral economy.

Engagement with the comparative literature on Latin American developmentalism allows the specificity of the Mexican case to be situated. Brazil’s development process dates from 1930—the year of the Vargas National Revolution—when the industrial class, the urban working class, and a new middle class converged for the first time in a coalition capable of challenging the dominance of the coffee-exporting oligarchy (Bresser-Pereira 1984, 9, 12). The successful implementation of Kubitschek’s developmentalist program (1956–1961) was possible because the institutional infrastructure to execute it had been built over the previous two decades, notably the Departamento Administrativo do Serviço Público (DASP, 1937), the Banco Nacional de Desenvolvimento Econômico (BNDE, 1952), the Superintendência da Moeda e do Crédito (SUMOC, 1945), and a network of technically trained officials whose formation began under Vargas (Sikkink 1993b, 547–552). What this trajectory reveals, when compared with the Mexican one, is that the construction of state institutional capacities took nearly two decades in Brazil and consolidated in the postwar period, whereas in Mexico that process was already under way from the mid-1920s, articulated upon the constitutional legitimacy of 1917 (Sikkink 1993b, 544–545).

The Argentine trajectory illuminates a different dimension. As late as 1942, an estimated 99 percent of public employees were selected for political reasons, and the equivalent of Brazil’s DASP was not created until 1957 (Sikkink 1993b, 556–557). The Banco Industrial, established in 1944, failed to consolidate as an instrument of sectoral financing. Between 1958 and 1960, during Frondizi’s own developmentalist presidency, it directed 45 percent of its credits to light industry rather than to the basic sectors the program prioritized, a reflection of an apparatus colonized by sectoral interests and lacking autonomous institutional identity (Sikkink 1993b, 561–563). As comparative studies on developmentalism in Brazil and Argentina have shown, the divergences between the two cases formed primarily between 1930 and 1955, through the contrasting institutional legacies of Vargas and Perón. The Vargas institutions survived and constituted the backbone of the technical bureaucracy; the Peronist ones were dismantled after 1955 (Sikkink 1993b, 566, see also 1993a, 30–31). This institutional instability was not altogether absent from the Mexican case, but the constitutional framework of 1917 offered a normative floor that limited the volatility of state commitments across administrations.

The Chilean case offers another angle of comparison. State-directed long-term industrial credit did not exist in Chile before 1939. It was the Popular Front coalition that created the Corporación de Fomento de la Producción (CORFO) that year to provide long-term financing to the emerging industrial sector, in response to the trade collapse of the Great Depression (Hastings 1993, 203–204). Before that date, the Chilean financial system depended on short-term bank credit; the central bank, created in 1925 as a semi-public institution with private sector representation on its board, was not conceived as an instrument of a national development strategy (Hastings 1993, 203). CORFO itself operated in an environment of political fragmentation that tended toward particularistic resource allocation, with private sector representatives on the boards of public credit institutions (Hastings 1993, 205). The contrast with the Mexican case resides in the moment and the mechanism of its constitution as a developmental state. A constitutional rupture that, prior to the Great Depression and the postwar period, articulated economic sovereignty, social welfare, and institutional construction as dimensions of a single national project.

2.2 Economic Nationalism and Revolutionary Thought

Economic nationalism and revolutionary thought are two key intellectual matrices for understanding the early Mexican variety of developmentalism. Together, they configured the criteria of legitimacy for state economic action. Conceptually, economic nationalism can be understood as a framework that links economic activity to the political community, asserting the primacy of national objectives over impersonal market forces or external interests. In contrast to economic liberalism—where the economy appears as an autonomous, self-regulating sphere—economic nationalism stresses that productive forces, institutional capacities, and patterns of specialization are shaped within specific historical and cultural contexts (Helleiner and Pickel 2005). In this tradition, Friedrich List’s notion of the “national economy” as a unit of development grounded in collective productive forces, rather than in the mere exchange of individual commodities, is emblematic (Levi-Faur 1997, 154–178).

In a similar vein, Pickel (2003, 105–127) conceives economic nationalism as an analytical perspective that helps explain how states define strategies of international insertion, regulate strategic sectors and forge internal coalitions around the protection and promotion of national development. It operates as a repertoire of ideas, narratives, and policy devices used to orient and justify state decisions in the fields of investment, credit, trade, and planning. In Mexico, this set of ideas converged with a historically grounded understanding of sovereignty linked to control over natural resources, the defense of the domestic market and the strengthening of a national economic community capable of sustaining long-term projects.

Rajchenberg (2020) further argues that economic nationalism cannot be reduced to symbolic exaltation of the nation. It should be seen instead as a conceptual quid pro quo that articulates power, identity and economic interests. In the Mexican case, this articulation took institutional form in the legal defence of national ownership of the subsoil, the regulation of concessions, the creation of state enterprises, and the design of financial instruments directed at strategic sectors. Nationalism, thus understood, became an ordering principle of economic policy that endowed state intervention with coherence and legitimized the expansion of its capacities.

Within this framework, pragmatism—understood as a heterodox, problem-driven orientation—also appears as a crucial dimension of state action. Economic activities cannot be separated from the social processes that give them meaning because they are embedded in institutions, power relations, cooperative arrangements, and conflicts among groups seeking to shape the allocation of resources. Decisions about what to produce, how to produce, and for whom to produce unfold within historically constituted normative structures and collective values. Economic models are therefore not abstract designs, but expressions of concrete configurations of social and political relations; they reflect how the form of the State is articulated with markets and with the interests of different groups. As suggested by a historical-sociological approach to development, understanding development requires situating it within a process of mutual determination between social structure, state decisions, and national projects (Vargas Escobar 2013). From this perspective, development finance—especially the creation of public financial infrastructure, development banks and the deliberate orientation of credit to productive activities—is a constitutive practice of the national project. The channeling of capital transforms social structures, reshapes alliances and produces “scales of community” by selecting strategic sectors, nurturing particular industries, and steering investment trajectories. Credit policy can thus be interpreted as a mechanism of nation-building that reorganizes groups, modifies capacities, and gives shape to a historically situated economic community (Vargas Escobar 2013).

Revolutionary thought deepened these elements by linking development, social justice, and economic sovereignty. The 1910–1930 cycle produced a political and conceptual rupture that questioned the Porfirian order and articulated a new legitimacy grounded in redistribution, agrarian reform, and the broadening of welfare (Fujigaki and Fujigaki 2012). Although heterogeneous, this intellectual horizon introduced a social conception of the economy in which the State appeared as guarantor of the public interest, mediator of conflicts, and agent of modernization. The 1917 Constitution crystallized this vision by establishing the original ownership of the nation over the subsoil, the social function of land, labor regulation, and the state’s authority to intervene in the economy “whenever the public interest so demands.”

The history of the economic ideas that sustained postrevolutionary state intervention has intellectual roots prior to 1917. The conceptions inscribed in Article 27—the original ownership of the nation over the subsoil, the social function of land, agrarian redistribution as a condition for strengthening the domestic market, and enabling industrial development—can be traced to the thought of those who participated directly in drafting the constitutional text. The most comprehensive political and intellectual analysis of this genealogy establishes that the principal ideas of Article 27 derive from organicist thought about Mexican society elaborated in the years before the Revolution, specifically from a body of work that conceived the redistribution of property as a necessary condition for increasing the consumption capacity of the middle and lower classes, strengthening the domestic market, and making industrial development viable (Córdova 1973). Those ideas reached the Constituent Congress of 1916–1917 through their author, who participated as adviser to the National Agrarian Commission in Querétaro, and were incorporated into the text by a reformist majority that confronted the resistance of the Carrancista faction, oriented toward liberal individualism (Córdova 1973, 224). The result was not the project of any specific faction: the Convention adopted the Carrancista conception of a strong state but conferred upon it powers of intervention that went beyond what Carranza himself had projected (Córdova 1973, 236). What emerged from Querétaro was an ambiguous but expansive mandate: the state was authorized—without being obliged—to carry out agrarian reform, regulate labor relations, and exercise sovereignty over subsoil resources. That ambiguity proved historically productive, leaving the postrevolutionary state a margin of action filled, between 1917 and 1941, with the measures, institutions, and regulatory frameworks that this article reconstructs.

3.1. 1917–1931: Revolutionary Ideas, Economic Nationalism, and First Measures

Drawing on the theoretical framework developed in the previous section, this part examines the historical manifestations that allow us to reconstruct the framing and periodization of the early Mexican proto-developmentalism. The trajectory from 1917 to 1931 shows how the principles of economic nationalism, the revolutionary legacy, and the gradual consolidation of a political center translated into concrete measures, inaugurating a mode of state economic intervention that preceded postwar Latin American developmentalism.

The period from the promulgation of the 1917 Constitution to the early 1930s can be understood as a phase of economic, institutional, and social reconstruction after the armed conflict. Articles 27 and 123 of the 1917 Constitution became the pillars of postrevolutionary economic sovereignty. Article 27 established the original ownership of the nation over the subsoil and natural resources, breaking with the Porfirian concession model and enabling future policies of nationalization and state control over oil and mining. In turn, Article 123 enshrined fundamental labor rights and defined the social function of property, thereby articulating a redistributive principle that would become a central axis of twentieth-century economic policy (Fujigaki and Fujigaki 2012). These articles not only responded to the grievances of the Porfirian regime, but also introduced an integrated view of economic and social development in which the state appeared as guarantor of the public interest, mediator of conflicts, and builder of economic citizenship.

3.2. Fiscal–monetary coordination and reforms toward a developmental use of public spending (1932–1941)

The transition from the orthodox cycle—culminating in the 1931 Calles Law—toward an economic policy oriented to national development began to take shape between 1932 and 1938, when the Mexican state progressively transformed its monetary function, reorganized the credit system, and established a new framework of coordination between the Ministry of Finance (Hacienda), the Bank of Mexico, and development institutions. This phase was crucial for building a public financial infrastructure in which fiscal policy and monetary policy moved toward a shared horizon that sought to stabilize economic activity, expand the domestic market, and use public credit as an instrument to stimulate national production.

Between 1932 and 1941, monetary policy and the financial architecture of the Mexican state underwent a gradual process of transformation that redefined the relationship between credit, stability, and development. This period did not entail an immediate break with the orthodox principles that had dominated economic policy in previous decades, but it did introduce institutional mechanisms that expanded the scope of state intervention in monetary and financial affairs, opening space for public credit to begin playing a more active role in economic recovery and in the consolidation of the domestic market. The coordination between fiscal and monetary policy acquired a closer character, and the Bank of Mexico embarked on a gradual transition toward practices that would later be recognized as part of a developmental orientation.

The starting point of this process lies in the insufficiency of the framework established by the 1931 Monetary Law and the 1932 General Law of Credit Institutions.² Although both laws had been designed to restore monetary stability and organize the banking system after the 1929 crisis, their provisions revealed important limitations in a context of contracting private credit, persistent deflation, and falling aggregate demand (Suárez Dávila 2012). The rigidity of the monetary regime hampered state intervention at a time when the economy required greater flexibility to confront the financial crisis. According to the specialized literature, this legal framework, while coherent with the stabilization goals of the period, still lacked sufficient tools to implement countercyclical measures or to support the productive needs of a weakened domestic market (Lomelí 2024).

From 1932 onward, and under the pressure of economic conditions, a broader reorganization of the monetary function began to take shape. The Bank of Mexico initiated an institutional adjustment process that strengthened certain regulatory instruments and opened the possibility of using rediscounts more extensively. Although these changes did not immediately transform the nature of the central bank, they did reflect an adaptation to prevailing circumstances and a more pragmatic understanding of the role monetary policy could play in the recovery. The reciprocity between Hacienda and the Bank of Mexico became more visible, especially regarding short-term financing and liquidity management (Knight 2023).

In 1933 and 1934, the Ministry of Finance increased its participation in the orientation of credit and began to coordinate its spending decisions more closely with the operations of the central bank. This coordination did not yet amount to an explicit development strategy, but it did allow public expenditure—allocated largely to infrastructure projects, communications, and support for agricultural sectors—to rely on clearer mechanisms to secure its financing and to sustain economic activity in an adverse context. The operational changes introduced during these years in the Bank of Mexico and in public credit institutions responded both to the need to guarantee liquidity and to the intention to prevent a deeper deterioration of the banking system (Lomelí 2024; Knight 2023).

Within this process, two legislative instruments played a particularly relevant role. The 1935 reform to the Monetary Law responded to the sharp rise in silver prices in international markets, which threatened to disarticulate the fiduciary system established in 1932. To prevent metallic coins from circulating as commodities rather than as currency, the government mandated the concentration of silver coins in the Monetary Reserve and established the Bank of Mexico’s banknote as the sole instrument of fiduciary circulation, designating the central bank as trustee of that Reserve (Romero Sotelo et al., forthcoming).³ The 1936 Organic Law of the Bank of Mexico then redefined the central bank’s position within the financial system: it established the Bank as a reserve bank and, clearing house for associated institutions, made affiliation mandatory for all banking and financial institutions, required them to deposit a share of their reserves with the central bank, and confirmed its role as financial agent and adviser to the Federal Government. These provisions gave the state, for the first time, effective instruments for conducting a coordinated national monetary and credit policy (Romero Sotelo et al., forthcoming).⁴

Throughout the second half of the decade, coordination between fiscal and monetary policy was consolidated through a series of legal reforms that more clearly redefined the position of the Bank of Mexico within the financial system. The 1936 Organic Law of the Bank of Mexico introduced provisions that expanded the central bank’s role in stabilization and regulation, facilitating the acquisition of government securities and the indirect financing of development institutions. These modifications helped strengthen the link between public spending needs and the actions of the central bank, while at the same time incorporating more flexible practices in credit management.

The 1938 organic reform deepened this trend. Although it maintained a strong concern for monetary stability and control of issuance, it also included provisions that reinforced the bank’s role in regulating banking markets, expanded its capacity for intervention, and adjusted coordination mechanisms with the Ministry of Finance. Through these reforms, the Bank of Mexico gradually acquired greater room for maneuver to operate as the state’s financial agent and as a regulator of credit, without abandoning the prudential principles that had characterized its performance since its creation.

This period was paralleled by a broader transformation in fiscal policy. The Ministry of Finance adopted a more active stance, increasing expenditures on infrastructure, irrigation works, roads, and education—actions that had a direct impact on domestic demand and economic recovery. The articulation between public spending and credit enabled various institutions—such as agricultural banks, refurbishment banks, and development agencies—to play a more visible role in channeling resources toward productive activities. This combination of fiscal and monetary measures did not yet amount to a fully formed developmentalist model, but it did represent a significant shift compared to the previous phase, incorporating elements of inter-institutional coordination and mechanisms explicitly oriented to supporting production.

Between 1940 and 1941, a coordinated package of laws was enacted that redefined the state’s functions in the economy, comprising the new Organic Law of Nacional Financiera (December 1940), the General Law of Credit Institutions and Auxiliary Organizations (May 1941), and the new Organic Law of the Bank of Mexico (also in May 1941). Within this process, the 1941 Credit Institutions Law was decisive in providing legal coherence to the relationship between private, mixed, and public banking. The new law sought to correct the limitations of the previous framework—particularly system fragmentation and the operational weakness of development banks—by establishing broader criteria for the organization of credit and explicitly recognizing the economic role of the state in the allocation of financial resources. It consolidated a vision in which banking, both public and private, was expected to operate under guidelines that articulated monetary stability with development goals (Romero Sotelo and Mijares 2025). The law thus offered a legal foundation to coordinate more closely the Bank of Mexico, the Ministry of Finance, and Nacional Financiera, making it possible to use public credit as an instrument to support strategic productive activities and strengthen the domestic market.

Between 1932 and 1941, the country’s monetary and financial architecture was therefore transformed gradually, driven by a challenging economic context and by a pragmatic reinterpretation of the state’s function. Legal reforms, closer coordination between Hacienda and the Bank of Mexico, and the expansion of intervention instruments constituted the institutional foundations of a more active economic policy that would increasingly orient itself toward the promotion of national development. This period established the framework within which, between 1932 and 1934, a political center capable of steering the national economy would be consolidated, and from which the 1940–1941 laws would emerge to give a definitive shape to the developmental uses of public credit.

3.3. The Consolidation of a Political Center to Steer the National Economy: The Interventionist State of Mexican Developmentalism (1932–1934)

The biennium from 1932 to 1934 marks a decisive moment in the formation of a state with effective capacity to steer the national economy. Under the presidency of Abelardo L. Rodríguez, institutional, political, and administrative conditions converged in ways that made it possible to articulate a coherent program of state intervention, marking a turning point in the postrevolutionary economic trajectory. This period crystallized a form of public action that, as Lomelí (2024) argues, can no longer be understood merely as a continuation of a reconstructive logic, but rather as the transition toward a state that explicitly assumed the function of correcting market failures, reorganizing the productive structure, and expanding social welfare. State intervention ceased to be episodic and acquired a systematic character, supported by new institutions, legal frameworks, and financial instruments.

Rodríguez’s previous trajectory at the Ministry of Industry and Commerce already revealed a structural reading of the crisis in which idle resources, a weak domestic market, business concentration, deflation, and credit contraction coexisted. In the face of these problems, his administration advanced an agenda that combined industrial promotion, economic regulation, administrative reorganization, and the stimulation of domestic demand. Among the first initiatives, the refurbishment banks geared to productive financing stood out,⁵ anticipating the practices of what would later become development banking. Rodríguez also promoted the creation of the National Economic Council, conceived as a consultative and coordinating body intended to harmonize production, assess the impact of laws, and provide statistical information to the State (Quirós Martinez 1934). These measures laid the foundations of a more articulated economic institutional framework oriented toward planning and promotion.

In the energy sector, the administration moved toward a more assertive affirmation of national sovereignty. The creation of PETROMEX in 1933, together with the establishment of national refineries and a pipeline to integrate the country’s energy markets,⁶ expressed a vision of the state as entrepreneur, tasked with ensuring domestic supply and reducing dependence on foreign companies. Although these actions did not yet amount to a fully consolidated project, they clearly delineated a strategic orientation according to which the state had to intervene directly in strategic sectors to guarantee both economic stability and future development.

Administrative reorganization was equally fundamental. In 1932, the former Ministry of Industry, Commerce, and Labor was transformed into the Ministry of National Economy, which meant the creation of a central body dedicated to coordinating, regulating, and promoting economic activity. In line with the diagnosis put forward by Lomelí (2024), this restructuring reflected a profound shift. The postrevolutionary state began to define itself not only by its capacity to pacify and rebuild, but also by its vocation to organize the economy and direct accumulation processes. The ministry became a key institution for articulating producers, consumers, and merchants, and for establishing mechanisms of price control, selective subsidies, and market oversight.

This reorganization drives also manifested itself in natural resources policy. The declaration of national mineral reserves responded to the need to avoid the concentration of subsoil rights in private hands and to preserve state control over strategic resources.⁷ These measures anticipated the major debates that would later culminate in Cardenista reforms, but their origin must be located in this period, when the first instruments of an active economic sovereignty policy were established.

Cooperativism also played a relevant role. With a new Cooperatives Law and the creation of the Department of Cooperative Promotion, the government sought to integrate broad sectors of rural and urban producers into collective schemes that facilitated production and commercialization, strengthening social cohesion and expanding the base of the domestic market. In this sense, Rodríguez’s approach coincided with what Lomelí (2024) identifies as central to the interventionist state, namely the construction of institutional mechanisms that transformed the productive structure while simultaneously addressing the goals of welfare and modernization.

Fiscal and monetary policy also underwent significant changes during this administration. On the fiscal side, the government opted to reduce taxes that weighed on production and consumption and introduced tax exemptions for cooperatives and strategic sectors. Tariff modifications were designed to balance industrial protection and input costs, avoiding both rigid protectionism and unrestricted free trade. In the monetary sphere, the government adopted a reflationary stance, increasing the issuance of banknotes, lowering interest rates, and gradually abandoning the rigidity of a fixed exchange rate. These measures, aimed at counteracting deflation and stimulating production, reflected the transition toward a more active approach to monetary policy.

In parallel, deep fiscal reforms were carried out that strengthened the capacity of the Ministry of Finance to direct resources toward projects of national interest. The Organic Law of the Federal Treasury, the Regulations for the Authorization of Loans, and the Law for the Clearance of Accounts established mechanisms for the centralization and control of public expenditure that would allow for more effective state intervention.⁸

The fiscal and financial coordination reforms of 1932–1934 created the institutional conditions within which Nacional Financiera would eventually transition toward development banking functions. That transition, however, was not inscribed in the institution’s founding norms of 1934. The decree of 24 April of that year created the institution with a circumscribed mandate: its primary function was the restoration of liquidity through the reincorporation into the private economy of real estate assets adjudicated to the government; its role as financial agent of the federal government was defined in terms of the management and custody of public securities, not long-term productive investment financing (Vargas Escobar 2013, chap. 4).⁹ The operational record for the period July 1934–October 1935 confirms that scope, as the institution confined itself to mortgage activities and debt management without authorizing productive investment credits.

Between 1937 and 1940, the institution expanded its presence in the capital market through the issuance of financial instruments and the purchase of government securities, fulfilling a stabilizing function in a context of exchange-rate uncertainty. Even so, it did not authorize long-term productive investment credits (Vargas Escobar 2013, chap. 4). It was the legislative reform of December 1940 that formalized Nacional Financiera’s reorientation toward development banking, redefining its object as intermediation between long-term capital and enterprises seeking to expand some branch of national production. The first large-scale industrial credit operation was concluded in 1942 (Vargas Escobar 2013, chap. 4). The period 1932–1934 built the administrative and financial platform that made that trajectory possible; it did not complete it.

In the labor sphere, the introduction of the minimum wage represented an important step toward incorporating welfare into the development strategy. Rodríguez emphasized that improving workers’ purchasing power was a necessary condition for expanding domestic consumption and promoting industrial growth.¹⁰ This position, consistent with the revolutionary ideology, reinforced the idea that industrialization had to be anchored in a solid domestic market and in the improvement of living standards.

All these measures converged in a form of state action that brought together the fundamental traits of early Mexican developmentalism. The Rodríguez administration did not elaborate a fully articulated doctrinal project, but it did manage to assemble a set of agencies, regulations, and administrative mechanisms that allowed the state to intervene in the economy in a rational and systematic way. Under his leadership, a political center capable of guiding economic activity was consolidated through planning, credit, regulation, public enterprise, and the articulation between the Ministry of Finance, the Bank of Mexico, and development agencies.

The distinction between the construction of state capacities and the political exercise of those capacities makes it possible to assign Cardenismo a precise place in the periodization without diminishing or overstating its contribution. The Cárdenas administration (1934–1940) has been characterized in the specialized literature as the moment of greatest relative autonomy of the postrevolutionary state vis-à-vis the dominant classes (Hamilton 1982, 3–4). That autonomy rested on a specific basis: the alliance between progressive factions of the state and mobilized peasants and workers, which provided political sustenance for state action that challenged the landowning and industrial classes and foreign capital in ways no previous administration had attempted. The Cardenista agrarian reform distributed between 18 and 20 million hectares—more than all previous governments combined—established collective ejidos on commercial haciendas, and effectively dismantled the power of the traditional landowning sector. The incorporation of the Confederación de Trabajadores de México (CTM) and the Confederación Nacional Campesina (CNC) into the structure of the party of state created the corporatist framework that would distinguish the Mexican regime from Latin American military authoritarianisms for decades. The expropriation of British and American oil companies in 1938 was the most visible exercise of economic sovereignty of the postrevolutionary period (Hamilton 1982, 4).

The institutional capacities that made that exercise possible had, however, been built before 1934. The main credit and development agencies—the National Agricultural Credit Bank (Banco Nacional de Crédito Agrícola, 1926), the refurbishment banks (1932), Nacional Financiera (1934), the National Urban Mortgage and Public Works Bank (Banco Nacional Hipotecario Urbano y de Obras Públicas, 1933)—were created during governments prior to Cardenismo, most of them during the Abelardo L. Rodríguez administration (Vargas Escobar 2025). The Six-Year Plan, frequently associated with the Cárdenas administration, was elaborated and launched during Rodríguez’s presidency and adopted by Cárdenas at the Querétaro Convention in 1933. The Ministry of National Economy, the Regulatory Law of Article 28, the National Economic Council, and the regulatory framework for public investment were all operative parts of the state apparatus when Cárdenas assumed the presidency (Vargas Escobar 2025). Cardenismo deployed, expanded, and politically radicalized those capacities; it did not found them.

The periodization proposed in this article therefore recognizes three differentiated contributions: the construction of the institutional and regulatory architecture of the developmental state (1932–1934); the exercise of those capacities with maximum relative autonomy vis-à-vis the dominant classes and mass political legitimation (1934–1940); and the definitive legal formalization of the articulation between public credit and industrial development (1940–1941).

In sum, between 1932 and 1934 the initial modality of the interventionist state that would distinguish Mexican developmentalism in subsequent decades took shape. It was during these years that the administrative, financial, and regulatory infrastructure was established—still incipient, but crucial—that enabled the state to assume the leadership of economic development. This period thus constitutes the origin of a type of state action that combined economic sovereignty, industrial promotion, expansion of the domestic market, and the construction of institutional capacities. It is from this convergence that the historically specific form of the Mexican variety of the developmental state was first delineated.