Mexicans felt that they were at last gaining economic independence from foreign influence.
How did the PRI accommodate many groups in Mexican society while keeping power for itself?
The issues facing Mexico were echoed in other Latin American nations. In the early 1900s, Latin America's economy was booming because of exports. Latin Americans sold their plentiful natural resources and cash crops to industrialized countries. In return, they bought products made in those countries.
Stable governments helped to keep the region's economy on good footing. Some Latin American nations, such as Argentina and Uruguay, had democratic constitutions. However, military dictators or small groups of wealthy landowners held the real power. The tiny ruling class kept the economic benefits of the booming economy for themselves. The growing middle class and the lower classes—workers and peasants—had no say in their own governments.
The Institutional Revolutionary Party (PRI) created a more stable government in Mexico and increased the representation of peasants and urban laborers.
During the 1920s and 1930s, world events affected Latin American economies. After World War I, trade with Europe fell off. The Great Depression that struck the United States in 1929 spread around the world in the 1930s. Prices for Latin American exports plunged as demand dried up. At the same time, the cost of imported consumer goods rose. Latin American economies, dependent on export trade, declined rapidly.
A tide of economic nationalism, or emphasis on home control of the economy, swept Latin American countries. It was directed largely at ending economic dependence on the industrial powers, especially the United States and Britain. Since consumers could no longer afford costly imports, local entrepreneurs set up factories to produce goods at home. They urged their governments to raise tariffs, or taxes on imports, to protect these new industries. Following Mexico's lead, some nations nationalized resources or took over foreign-owned industries.
Students rally to support President Lázaro Cárdenas's nationalization of the foreign-owned oil industry. One of the signs reads: “We will collaborate enthusiastically in the betterment of Mexico.”
The drive to create domestic industries had limited success. In Mexico, Argentina, Brazil, and a few other countries, some areas of manufacturing grew. Mexico and Venezuela also benefited from a growing demand for their oil. But most Latin American nations lacked the resources to build large industries. As in the past, the unequal distribution of wealth hurt efforts at economic development. Only a few in the wealthy ruling class benefited from economic growth.