Domestic Politics and Foreign Investment: British Development of Mexican Petroleum, 1889–1911

Jonathan C. Brown
1987 Business History Review  
How do host country politics arfect foreign business interests? Tbis question is so complel that, while recognizing some influence, bistorians still concentrate on profit-making and market forces in order to analyze foreign investment, the growth of the firm, and the economic performance of lessdeveloped countries. Those concerned more with the reasons for business elpansion at the source rather than at the destination seldom consider the relationsbip between host-country politics and foreign
more » ... vestment.2 Others who do ponder the relationship may emphasize either the domination of local elites by foreign interests or the role of the state in promoting development. Scholarly analysis of the 'politics of modernization' most often centers on economic policies. The tendency is to assume that economic forces in and of themselves elplain economic performance -whether one sees that performance in positive or pathological terms. The competition for domestic politicial power becomes a mere by-product of the profit-making (or capital accumulation) of the foreigners.3 In other words, economic policy is mistaken for politics. The first represents the government's priorities for http://lanic.utexas.edu/project/etext/llilas/tpla/8702.pdf Jonathan C. Brown Domestic Politics and Foreign Investment: British Development of Mexican Petroleum the spending of scarce pubtic capital and the other, potitics, is the struggle among power contender s to gain and maintain control of the government. Latin Americanists of late have been intrigued by the elact relationship between domestic patitics, economic poticy, and development. They are finding that the half -century prior 10 the first world was a critical period in which Coreign investment contributed 10 the first intensive process of economic modernization in Latin America.« Questions remain. Elactly how mueh of the outcome of this development process can be attributed 10 the eIternal Corces, represented by Coreign investment and teehnology, and how mueh by internal Corces, represented by economic poticy and sheer patitical will? Can we scholars distinguish the outcome oCpoticy Crom that oC potities? This article proposes that domestic politicians struggling Corpower within host countries have had a more important role in shaping their modern economic environment than has been reckoned. This is not to say their control over the course of capitatist development is not ambiguous. The results oCtheir activity (potitics) often differ from their intended goals (policies), and the needs of political accomodation even in authoritarian political systems may undermine the most appropriate poticies. Latin American economies in particular tend 10 be highly potiticized. Foreign businessmen. therefore. owe much of their success and failure not onIy to their manipulation of production and markets but also to their in~ividual relationships with domestic politicians. How else can one elplain the success of Sir Weetman Pearson in developing the oil business of Melico during the regime oCPorfirio Díaz? A
doi:10.2307/3115461 fatcat:xqxri7bizjholiin3hilkmhk7y