What If Juárez Developed Different Border Economic Policies?

The Actual History

Benito Juárez, Mexico's first indigenous president, governed during one of the most tumultuous periods in the nation's history, from 1858 to 1872 (with interruptions). Following Mexico's defeat in the Mexican-American War (1846-1848) and the subsequent Treaty of Guadalupe Hidalgo, Mexico lost nearly half its territory to the United States. This dramatic territorial reduction established the Rio Grande as the new international boundary and created the foundation for the modern US-Mexico border region.

Juárez came to power during the Reform War (1857-1861), a civil conflict between liberals and conservatives. His liberal government implemented the Reform Laws, which reduced the power of the Catholic Church and the military while promoting a secular state. However, his presidency was interrupted by the French Intervention (1862-1867), during which Emperor Maximilian was installed by Napoleon III. After the French withdrawal and Maximilian's execution, Juárez returned to power in 1867.

During his restored presidency, Juárez focused on national reconstruction, institutional reforms, and economic development. Regarding border economic policies, Juárez established the "Zona Libre" (Free Zone) in 1858 in the northern border state of Tamaulipas, which was later extended to other border states. This policy allowed duty-free imports of foreign goods within a narrow strip of land along the border (approximately 20 kilometers wide). The Free Zone was designed to stimulate economic activity in Mexico's northern frontier, which had become economically dependent on the United States after the territorial losses.

The Free Zone represented a pragmatic approach to border economics. Rather than implementing strict protectionist policies that might have been ideologically consistent with economic nationalism, Juárez acknowledged the economic reality of the border region. The policy recognized that Mexican border communities were geographically isolated from central Mexico and more economically integrated with the United States.

After Juárez's death in 1872, the Free Zone continued under his successor Porfirio Díaz, who eventually embraced foreign investment as a cornerstone of his economic policy during the "Porfiriato" (1876-1911). Under Díaz, Mexico saw significant industrialization and infrastructure development, but also increasing inequality and foreign economic dominance.

In the 20th century, Mexico's border economic policies evolved further. Following the Mexican Revolution, nationalist economic policies prevailed until the mid-20th century. In 1965, Mexico established the Border Industrialization Program (BIP), which created the maquiladora system—factories in the border region that import materials and equipment duty-free for assembly or processing before re-exporting the finished products. This program was designed to address unemployment in the border region after the end of the Bracero Program that had allowed Mexican agricultural workers to work temporarily in the United States.

The maquiladora system expanded dramatically after the implementation of the North American Free Trade Agreement (NAFTA) in 1994, which eliminated most tariffs on products traded between Mexico, the United States, and Canada. Today, the border economy is characterized by complex supply chains, significant manufacturing activity, and ongoing economic integration between the two countries, though with persistent inequality, environmental challenges, and periodic tensions over migration and security issues.

The Point of Divergence

What if Benito Juárez had pursued more protectionist economic policies for Mexico's northern border instead of establishing the Zona Libre? In this alternate timeline, we explore a scenario where, following his return to power after defeating the French in 1867, Juárez implemented a different economic vision for Mexico's northern frontier.

There are several plausible mechanisms for this divergence:

First, Juárez might have been more influenced by economic nationalism in the aftermath of foreign intervention. Having witnessed the French occupation and American territorial expansionism, he could have concluded that economic integration with the United States posed an existential threat to Mexican sovereignty. In this scenario, rather than pragmatically accepting the economic reality of cross-border dependency, Juárez might have viewed the border region as a critical buffer zone requiring protection through strict tariffs and economic development initiatives oriented toward the Mexican interior.

Alternatively, Juárez might have encountered different domestic political pressures. If Mexican manufacturers and merchants from the central regions had formed a more powerful lobbying bloc, they could have convinced Juárez that the Free Zone disadvantaged domestic producers by allowing cheap foreign goods to enter the border region. With stronger opposition from these economic interests, Juárez might have abandoned or significantly modified the Free Zone concept.

A third possibility involves different advice from Juárez's economic advisors. If Juárez had been counseled that strengthening economic ties with the United States would ultimately lead to further American economic colonization, he might have pursued a more autarkic approach, seeking to develop independent industrial capacity in the border region with stronger ties to central Mexico.

In any of these scenarios, instead of expanding the Free Zone, Juárez implements a "Programa de Desarrollo Económico Fronterizo" (Border Economic Development Program) in 1868. This comprehensive policy includes:

Protective tariffs on imported goods to shield nascent Mexican industries
Government-subsidized transportation infrastructure connecting the border regions to central Mexico
State-backed investment in Mexican-owned manufacturing and natural resource extraction in the northern states
Educational and technical training programs to develop a skilled workforce
Restrictions on foreign land ownership within 100 kilometers of the border

This alternate approach would set Mexico on a dramatically different economic trajectory, particularly in its relationship with its northern neighbor.

Immediate Aftermath

Economic Disruption and Reorganization (1868-1872)

The immediate effects of Juárez's protectionist border policies would be economically painful for the border communities. Towns like Ciudad Juárez (then called El Paso del Norte), Matamoros, and Nuevo Laredo had developed economies deeply integrated with their American counterparts. The abrupt imposition of tariffs and restrictions on cross-border commerce would trigger significant economic dislocation.

American merchants in border towns like El Paso, Brownsville, and Laredo would protest vigorously to their government. U.S. Secretary of State William H. Seward, who had just negotiated the purchase of Alaska from Russia in 1867 and was known for his expansionist views, would likely have applied diplomatic pressure on Mexico to reverse these policies. However, Juárez, bolstered by nationalist sentiment following the victory over the French, would have remained firm in his commitment to economic sovereignty.

The U.S. government, still focused on post-Civil War Reconstruction, would be unlikely to resort to military action, but bilateral relations would cool considerably. American investors would delay or cancel planned investments in Mexico's northern states, creating short-term capital shortages.

Within Mexico, the policies would create winners and losers. Border merchants dependent on American trade would suffer immediate losses, triggering protests in border cities. However, Mexican manufacturers from Mexico City, Puebla, and other industrial centers would begin expanding their distribution networks northward to fill the void left by American goods. This process would be gradual and incomplete in the first years, leading to higher prices and some shortages of consumer goods in the border region.

Infrastructure Development Initiative (1869-1875)

Recognizing that economic isolation without connectivity to central Mexico would be disastrous, Juárez would authorize an ambitious infrastructure program. In 1869, construction would begin on an expanded national railroad network prioritizing north-south connections. The Mexico City-Veracruz line, completed in 1873 (as in our timeline), would be just the first step in a more ambitious network.

This infrastructure push would create significant employment in the border states, partially offsetting job losses in trade-dependent sectors. Mexican engineers trained under Juárez's expanded educational initiatives would gain valuable experience, and a domestic construction industry would begin to flourish.

The most significant immediate challenge would be financing these projects. Without extensive foreign investment, Mexico would need to rely more heavily on domestic capital and government revenues. Juárez would implement progressive taxation on mining operations and large landholdings to fund development, angering some elites but strengthening the central government's financial position.

Border Industrial Complexes (1870-1876)

By 1870, Juárez would launch the first "Complejo Industrial Fronterizo" (Border Industrial Complex) in Monterrey, with additional complexes planned for Ciudad Juárez and Matamoros. These state-supported industrial parks would offer subsidized land, tax incentives, and technical assistance to Mexican entrepreneurs establishing manufacturing operations.

Initial industries would focus on processing the region's natural resources—textiles from northern cotton, processed foods, leather goods, and basic metallurgy. While less efficient than their American counterparts initially, these industries would benefit from protective tariffs and proximity to local markets.

A critical component of this initiative would be technical education. Juárez would establish the Instituto Politécnico Nacional (National Polytechnic Institute) in 1871 (much earlier than in our timeline, where it was founded in 1936), with satellite campuses in major border cities. These institutions would focus on practical engineering, agricultural science, and business management, creating a skilled workforce for the new industrial complexes.

Sebastián Lerdo de Tejada's Continuation (1872-1876)

Following Juárez's death in 1872 (as in our timeline), his successor Sebastián Lerdo de Tejada would continue and expand these protectionist policies. Lerdo, who had served as Juárez's Minister of Foreign Affairs, shared many of his predecessor's nationalist economic views.

Under Lerdo, the initial economic dislocations would begin to stabilize. By 1875, a more self-sufficient border economy would be taking shape, with growing industrial centers in Monterrey, Ciudad Juárez, and Tijuana. While still not as prosperous as they might have been under free trade, these cities would be developing distinctive Mexican industrial identities rather than serving primarily as commercial appendages of U.S. border towns.

Lerdo would also negotiate more favorable terms with British investors to diversify Mexico's international economic relationships, reducing dependence on the United States. This would include concessions for British-financed railroads connecting the Gulf of Mexico to the Pacific, creating alternative trade routes that bypassed the U.S. entirely.

By 1876, when Porfirio Díaz overthrows Lerdo in the Revolution of Tuxtepec (as in our timeline), the economic foundation of Mexico's northern border would be substantially different—less integrated with the United States, more connected to central Mexico, and with a nascent industrial base under predominantly Mexican ownership.

Long-term Impact

The Modified Porfiriato (1876-1911)

In this alternate timeline, Porfirio Díaz would still come to power in 1876, but he would inherit a northern border region with a different economic structure. While Díaz would maintain his policy of "order and progress" through centralization and modernization, his approach to foreign investment would be modified by the existing northern economic infrastructure.

Rather than allowing unrestricted foreign investment throughout Mexico, Díaz would maintain some of Juárez's protectionist policies in the border region while opening the rest of the country to foreign capital. This "dual economy" approach would create a distinctive pattern of development:

Border States: Continued development of Mexican-owned medium-sized industries, protected by moderate tariffs but increasingly competitive. Monterrey would emerge as Mexico's industrial capital, with steel production, brewing, glass manufacturing, and cement production dominated by Mexican family conglomerates like the Garza Sada family (founders of the VISA Group).
Central and Southern Mexico: More similar to our timeline, with extensive foreign investment in mining, agriculture, and railroads. British, French, and German capital would predominate, with American investment playing a smaller role than in our timeline.

This modified Porfiriato would still create significant economic growth but with somewhat more balanced development. Income inequality would remain severe but with a larger Mexican middle class in the northern states comprised of industrialists, engineers, and skilled workers.

Mexican Revolution and Its Aftermath (1910-1930)

The Mexican Revolution would still occur around 1910, driven by the same fundamental factors of inequality, lack of political freedom, and peasant land hunger. However, in this timeline, the Revolution would play out differently in the north:

The stronger Mexican business class in the border states would be more ambivalent about the Revolution, supporting political reform but resistant to radical economic restructuring.
Revolutionary leaders from the north, like Francisco I. Madero and Venustiano Carranza, would advance a more moderate program emphasizing political democratization over economic transformation.
The northern border would be less dependent on the U.S. economy, reducing American economic leverage during the conflict.

The Constitution of 1917 would still establish principles of national resource ownership and labor rights, but with more exceptions for existing Mexican-owned industries. The post-revolutionary governments would emphasize partnerships with domestic industrialists rather than expropriation.

By the 1920s, Mexico's northern industrial belt would be a major political force, with industrialists from Monterrey, Chihuahua, and Coahuila wielding significant influence in national politics. Presidents Álvaro Obregón and Plutarco Elías Calles would pursue policies balancing revolutionary nationalism with protection of domestic industry.

The Great Depression and Import Substitution Industrialization (1930-1945)

The Great Depression would hit Mexico hard, as in our timeline, but the impact would differ in the border region. With less dependence on exports to the U.S. market and more diversified manufacturing, northern Mexico would prove somewhat more resilient to the economic collapse.

President Lázaro Cárdenas (1934-1940) would still pursue nationalist policies, including the 1938 oil expropriation. However, rather than creating entirely state-owned enterprises, Cárdenas would form public-private partnerships with Mexican industrialists from the north, creating hybrid companies combining state oversight with private management expertise.

The foundations laid by Juárez's alternate policies would make Mexico particularly well-positioned to pursue Import Substitution Industrialization (ISI). Unlike other Latin American countries that began ISI from a limited industrial base, Mexico's northern manufacturing belt would already have decades of experience in protected industrial development.

During World War II, Mexico would supply not only raw materials to the Allied war effort (as in our timeline) but also manufactured goods produced in the northern industrial complexes. This would accelerate industrial development and technological acquisition, positioning Mexico more favorably for the post-war period.

Divergent Development Paths (1945-1980)

In the post-war era, Mexico's economic development would follow a path distinct from our timeline:

No Bracero Program: With stronger industrial employment in the border region, there would be less pressure for a large-scale guest worker program like the Bracero Program (1942-1964). Migration to the United States would still occur but at significantly lower levels.
Mexican Industrial Conglomerates: Rather than relying on foreign investment to drive industrialization, Mexico would develop powerful domestic industrial groups centered in the north. Companies like Grupo Monterrey, Grupo Chihuahua, and Cementos Mexicanos (CEMEX) would emerge earlier and grow larger than in our timeline.
Balanced Regional Development: The transportation infrastructure connecting the border region to central Mexico would facilitate more balanced industrial development. Secondary manufacturing centers would develop in Guadalajara, Puebla, and the Mexico City metropolitan area, creating a more distributed pattern of urbanization.
Enhanced Technological Capacity: With a longer history of industrial development, Mexican companies would develop greater technological capabilities. Technical universities in the north would produce engineers and scientists who would contribute to indigenous innovation rather than relying primarily on imported technology.

By the 1970s, Mexico would be more similar to countries like South Korea or Taiwan in its development model—pursuing export-oriented industrialization but with substantial domestic ownership and technological capabilities—rather than following the maquiladora model of assembly operations owned by foreign capital.

No NAFTA Path (1980-2025)

The most dramatic divergence from our timeline would occur in the 1980s and beyond. The debt crisis of 1982 would still impact Mexico severely, but the response would differ:

Rather than embracing Washington Consensus reforms and free trade as in our timeline, Mexico would pursue a hybrid model of gradual market opening while maintaining strategic protections for key industries.
Instead of NAFTA, Mexico might negotiate a more limited trade agreement with the United States in the 1990s, preserving greater policy autonomy.
The northern border would not develop the massive maquiladora industry seen in our timeline. Instead, it would feature a mix of Mexican-owned manufacturing firms, joint ventures with foreign companies, and service industries.

By 2025, this alternate Mexico would likely feature:

A per capita GDP perhaps 30-40% higher than in our timeline, with a larger middle class and somewhat reduced inequality
Greater technological capacity, with Mexican firms competing globally in sectors like cement, steel, food processing, and perhaps consumer electronics
More balanced trade relations with the United States, with lower trade volume but higher Mexican value-added content
Reduced migration to the United States, with the northern Mexican states serving as destinations for internal migration
Stronger democratic institutions, supported by a more independent economic elite and middle class
Persistent challenges of corruption and organized crime, but with stronger institutional capacity to address them
More resilience to external economic shocks due to greater economic diversification and lower external dependency

The border region itself would be characterized by vibrant Mexican industrial cities with their own cultural and economic identities, rather than serving primarily as manufacturing platforms for U.S. companies or transfer points in global supply chains.

Expert Opinions

Dr. Nora Rodríguez, Professor of Economic History at El Colegio de México, offers this perspective: "Juárez's decision to establish the Free Zone reflected pragmatic acceptance of geographic reality rather than his ideal economic vision. Had he implemented stronger protectionist policies as in this alternate scenario, Mexico might have suffered short-term economic pain but potentially gained long-term developmental advantages. The key insight from this counterfactual is that early policy decisions about economic sovereignty can have cascading effects over centuries. Mexico's current dependence on the U.S. market was not inevitable but the product of specific policy choices made during crucial historical junctures."

Dr. Michael Kanner, Distinguished Professor of U.S.-Mexico Relations at the University of Texas, provides a different analysis: "This alternate timeline likely overestimates the capacity of the 19th-century Mexican state to implement and sustain such ambitious developmental policies. The Juárez administration faced enormous fiscal constraints and political instability that would have complicated any large-scale industrial policy. Furthermore, geography is destiny to some extent—the natural economic orientation of northern Mexico toward U.S. markets would have created ongoing pressure against protectionist policies. Still, even moderately more successful efforts to develop indigenous industrial capacity could have significantly altered the power dynamics of the U.S.-Mexico relationship."

Dr. Elena Vásquez, Economic Historian at Universidad Autónoma de Nuevo León, emphasizes the regional dimensions: "The northern border states have always maintained a complex relationship with central Mexico, often seeing themselves as distinctly northern in identity. Juárez's alternate border development program might have simultaneously strengthened Mexico's national economy while also fostering a stronger regional identity in the north. The industrial elites of Monterrey, Chihuahua, and Tijuana would have wielded significant political influence, potentially pushing for greater federalism or regional autonomy. This might have created a more polycentric Mexican state rather than the highly centralized system that developed under Díaz and persisted through most of the 20th century."