Nationalization of electricity and oil in core and periphery: Norway versus Mexico

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Degree Project with Specialization in Historical Studies

30 Credits

Nationalization of electricity and oil in

core and periphery:

Norway versus Mexico

Nationalisering av el och vatten i kärna och periferi:

Norge versus Mexiko

Johannes Wilm

Master of Arts in History, 120 credits 28 May 2019

Examiner: Johan A. Lundin Supervisor: Mats Greiff

Department of Society, Culture and Identity

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Nationalization of electricity and oil in Norway and

Mexico

A historical comparison

The aim of this thesis is to find the historical differences of nationalization in a peripheral and in a central country. I will look at and compare the development and the processes of nationalization of the petroleum and hydropower industries in Mexico and Norway and how these differed from a world system perspective. The question of nationalization of resources and the countries' respective history in this field are oftentimes invoked in discourses in both countries. The latest examples thereof were the debate about the need to join the Agency for the Cooperation of Energy Regulators (ACER), a regulator that all EU members are part of without most even being aware that their country is participating in it, but that in the case of Norway's decision to join it in spring 2018 lead to massive campaigns involving trade unions and environmental organizations, and which the Norwegian Labor party have a large internal debate on whether joining an organization that

regulated energy trade would have negative consequences for Norway1_{. In Mexico, the theme of oil}

is one of the favorite themes of newly elected President Andrés Manuel Lopez Obrador. He

promised that he would stop any privatization efforts of either electricity or petrol sector should he win2_{. Given that the question seems so important to each country, one has to wonder why the}

outcome is so different.

Background

The background for this thesis is that I have lived in Norway during most of my university studies in the years 2000-7. A theme of national pride that was repetitively mentioned – although without

1 Wernersen, “Stortinget stemte ja til EUs energibyrå Acer.”

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historic details – was the fact that Norway had achieved one of the highest living standards in Europe by nationalizing the country’s national resources. Starting in 2006, I spent time in Mexico on a series of trips lasting a month to half a half a year. On my first trip I arrived in Mexico City as the supporters of presidential candidate Andrés Manuel Lopez Obrador occupied great parts of the inner city for close to half a year. I spent several months in and around the protest camps and also there, among the candidates supporters, the importance of the nationalization of natural resources was mentioned frequently – with slightly more focus on historic details. A point repeated by the Lopez Obrador supporters was that there was a potential for higher living standards that could be achieved by means of the natural resources, but that this was not yet realized.

Method

I had read some texts around Mexican oil nationalization around 2006, and had a basic understanding of the establishment of the modern Norwegian welfare state through my lower degree studies, but I did not initially have a full understanding of what had happened in each case. Given that I had some idea of the current state of the two countries, I choose dependency theory to start with as an overall framework within which to do the comparison. I was prepared to change theory framework along the way should it turn out not to apply well for this comparison. While I was surprised at a lot of the details I encountered during the investigation, the overall framework seemed applicable also after investigating the details, although not quite in the way I had

anticipated. I had assumed I would find a lot of numeric differences in profit margins, percentages lost to corruption or directly stolen, etc. . What I did find was more about what kinds of actions the governments could get away with and what seems to have been deemed acceptable behavior under different circumstances – for example how the Norwegian government could set certain rules for oil companies and the companies accepted by those, whereas oil companies in Mexico to a much higher degree went into direct conflict with the Mexican government when it tried to use restrictive measures.

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I looked at texts written about historical events in Mexico and Norway. Most of the methodology consisted of reading various scientific and newspaper articles about the events as they unfolded. Using this material, I conducted four minor investigations into the history of the petroleum industry and development of electricity in the form of hydropower in both countries. A lot of these sources are secondary sources, but several them could also be classified as primary sources as they were written at the time of the event happening, or at least very close to the time.

The sources were chosen as they were the closest available source to historical events given that statistical material is rare, and oral sources no longer available due to distance in time and geography. Difficulties with the chosen written sources, as with all accounts of current events or history presentations, are that they were written by newspaper authors and historians who may have had their own narrative and their choice of facts to present may not have been the best data points for me to look had I had access to all available information at the time of the events. A lot of this background was lost to me as I was not aware of the historic context in which it had been written. In one case I was aware of the context – a book written by presidential candidate Lopez Obrador in 2006 (or at least attributed to him) was obviously written in the context of a political campaign and part of the goal of publishing it was to obtain more support for Lopez Obrador’s view to not let private actors into the oil industry. However, the book is written as a history book. The history as it is presented did not differ much from how it was presented in older Mexican history books. The plan seems to mainly have been to make Mexicans living in 2006 aware of the importance that oil had in shaping the golden post-war years rather than give a particularly partisan description of the events of that time.

Another difficulty with the available material is that given that I could not control what data points are available to me means that individual data points are not directly comparable. Comparison therefore has to happen on qualitative/interpretative data of the overall nationalization processes rather than individual aspects of it.

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Natasha Vall, professor of urban and cultural history, describes some of the problems of doing historic research of distinct geographic cities3_{and describes some of the same challenges}

encountered when comparing countries: It is difficult to break out of preexisting ideas of national differences when doing comparison. The second part is that a interpretative comparison of data cannot easily be used to find explanations immediately within the data. This was a reason why I employed a wider theory for the purpose of analysis, and the one that seemed to work well in this case has been dependency theory. The parts of this theory are further explained in the theory chapter.

My method also included some translation from Spanish, Norwegian and Swedish into English. Translations can be problematic in that language specific meanings are lost. I did these translations myself and did my best to preserve the original meaning to the extent that I was aware of it.

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Mexico and Norway: Comparison of Two historical

attempts of nationalizing oil – theoretical

underpinnings

During the 20th_{Century several attempts were made to nationalize natural resources in different}

parts of the world. Two places that differ markedly in their outcome were Mexico and Norway. But why Mexico and Norway? Both countries nationalized both oil and electricity production, yet there is a difference between them in that the outcome was different that one country belonged to the core while another belonged to the periphery. In this chapter, I will present the development of thinking about development leading up dependency theory and the concept of core and periphery.

External factors: Imperialism / world system and development

One explanation for the difference in outcomes in the two countries is their different position in relation to other countries or the “world system” as it has been termed by Immanuel Wallerstein 4

and how Norway and Mexico could obtain development.

A lot has been theorized about such connections as part of the discussions on imperialism and colonialism. This is relevant for the case in point in that the difference in geographic placement of Norway and Mexico and their history put that in different position in relation to imperialism.

David Ricardo

British political economist David Ricardo (1772–1823) made one of the earliest calculations regarding international trade that continues to be used to predict development strategies. Ricardo was looking at world trade on whether a country should try to be self-proficient or rather produce in

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cooperation with other countries by importing and exporting as much as possible. Ricardo’s calculation concluded that it would always be best to export and import – even for countries that were less efficient in producing every good. Ricardo’s calculation showed that also these countries could gain by focusing on the production of the good that country was best at comparatively to other goods (having a comparative advantage of producing said product5_{). While Ricardo’s model}

can be useful for showing the need for international cooperation, I choose here not to build on this model as it does not take into account the differences of power between countries; the question of whether one should trade with other countries and what one should trade was presented as entirely up to the country in question itself.

Karl Marx

Karl Marx (1818-1883) wrote about the interconnection of European and Asian politics such as how a rebellion in China could influence agricultural prices in England and how the British Hindustan and imperial China simply seemed like archaic copies of the European countries’ past:

The country that is more developed industrially only shows, to the less developed, the image of its own future6

Marx suggested that these countries would follow the western country’s development eventually, and that the influence of western countries brought these countries historically forward7_{. Marx}

mentioned how the influence of Britain was bringing India into the modern world through the invention of trade infrastructure:

5 Ricardo, On the Principles of Political Economy and Taxation; Smukkestad, Den Innviklete utviklingen. 6 Marx, Kapital, vol. I, sec. Preface.

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Steam has brought India into regular and rapid communication with Europe, has connected its chief ports with those of the whole south eastern ocean, and has revindicated it from the isolated position which was the prime law of its stagnation.8

Marx did note, however, that the western countries had a fundamentally destructive effect on their colonies:

The profound hypocrisy and inherent barbarism of bourgeois civilization lies unveiled before our eyes, turning from its home, where it assumes respectable forms, to the colonies, where it goes naked.9

Marx also seems to have been a bit unclear as to whether each country would have to go through all stages of development and which ones could just leap ahead, but he seems to have assumed that the European countries would have to go through all stages whereas other countries may just copy.10

It is also important to note that Marx11_{saw that a lot of the primitive accumulation that gave}

European elites initial capital was obtained through slavery, wars, and land grabbings, all of would be seen an illegal and unethical if they were to be tried at a later stage of capitalist development in a western country.

These two views: the one of development in the Third World being hindered by the First World and that of the First World in some sense advancing development in other parts of the world have influenced subsequent theories.

8 Marx and Engels, On Colonialism, 82. 9 Marx and Engels, 86.

10 Marx, “First Draft of Letter To Vera Zasulich.” 11 Marx, Kapital, vol. I, chap. 26.

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After World War I

Around the time of the conclusion of World War One, a debate was started by Vladimir Lenin (1870-1924, Russia) and Rosa Luxemburg (1871-1991, Germany/Poland), both communist revolutionaries, who were interested in the question of development to decide where they should start revolutions and which countries could expect to obtain socialism/communism immediately and which ones would have to wait. These texts were therefore less analytical and more focused on possible actions.

Lenin followed Marx in that he first saw the need for capitalist development and believed that a peripheral country, such as his own Russia, should and could follow the German example where took over and monopolized industry during World War One. Lenin called this ‘monopoly state capitalism’ and he saw it as rationalizing what the otherwise chaotic and inefficient market had done. Even though in Germany it was not done in order to create socialism, but rather it was an unintended consequence, Lenin saw this as a building block for socialism in Russia12_{. Lenin saw}

now problem in using dictatorial means to speed up development13_.

So in part, Lenin seemed to support the idea that First World development could be copied in other places. But what the interplay between First and Third World? In Imperialism, the highest stage of

capitalism14_{, Lenin explains his view that the big imperialist powers have divided the world}

between themselves and that the production in their colonies forms part of the production process of each of the empires. The colonies can therefore not be said to have an independent development, but rather, they are linked to the entire production processes of the entire empire they are part of. Rather than looking at whether an individual country is sufficiently developed in its production

12 Vladimir Ilyich Lenin, “Imperialism, the Highest Stage of Capitalism,” in Lenin Collected Works, vol. 22 (Moscow: Foreign Languages Publishing House, 1917), 185–304; Vladimir Ilyich Lenin, “Chapter Š11 ‘Can We Go Forward If We Fear To Advance Towards Socialism?’ In ‘The Impending Catastrophe and How to Combat It,’” in Lenin

Collected Works, vol. 25 (Moscow: Progress Publishers, 1917), 360–363; Vladimir Ilyich Lenin, “The Tax in

Kind,” in Lenin Collected Works, vol. 32 (Moscow: Progress Publishers, 1921), 329–365. 13 Lenin, “The Tax in Kind.”

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processes, one should look at which is the weakest link in the chain of imperialist countries.

Nevertheless, a revolution would still not be possible without some participation of the First World:

You all know [...] to what extent capital is an international force, to what extent all the big capitalist enterprises, factories, shops, etc., all over the world are linked up together; this makes it obvious that in substance capital cannot be completely defeated in one country. It is an international force, and in order to route it the workers must also make a concerted effort on an international scale. [… W]e have been telling the workers again and again that the cardinal task, and the fundamental condition of our victory is to spread the revolution to, at least, a few of the most advanced countries. And our main difficulties [...] have been due to the fact that the West European capitalists managed to bring the war to an end and stave oft revolution.15

Luxemburg did not seem to agree that taking a measure from dictatorial and capitalist Germany could be applied in such an entirely different context. For her, it was essential to have parliamentary democracy and freedom to organize, also for those opposed to the revolution, as otherwise the revolution could hardly be said to represent freedom16_{. As for the interconnection between}

developed and underdeveloped country, Luxemburg17_{argued that there was an ongoing exploitation}

by force of the Third World (similar to how Marx described it) and that this continued even during fully established capitalism in the central countries and that this was an aspect capitalism depended upon.

15 Lenin, “Speech Delivered the Fourth All-Russia Congress Of Garment Workers February 6, 1920.” 16 Luxemburg, “The Problem of Dictatorship.”

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After World War II

After World War II, the question of development was put on the agenda by the newly formed United Nations. The main view that seems to have been adopted in the early years was that of the First World being an example to copy by the Third World – at the time known as modernization theory – as one assumed that the Third World was simply behind in terms of development. The United Nations now included both more established Socialist countries and capitalist countries, who each had their own version of modernization theory. Various development programs were designed based on this concept. In general, they tried to combine investments into state and private sectors of a given country with technology transfer from the First World18_.

Western modernization strategies

Western, US-allied countries, took on a phase model developed by US American economist and political theorist Walt Whitman Rostow19_{. The idea shown in Rostow’s model was that a particular}

‘impulse’ from outside could be used to kick-start an economy and modernize an underdeveloped country. An impulse could also have come from inside the country, but if it came from outside – such as through help of the United States – the country needed to focus on exports to sell on the world market. Such export oriented strategies for development mainly built on the model of David Ricardo.

18 Wallerstein, “The Rise and Future Demise of World-System Analysis”; Smukkestad, Den Innviklete utviklingen. 19 Rostow, “The Take-Off Into Self-Sustained Growth”; Rostow, The Stages of Economic Growth.

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1. Traditional society

At this stage industry hasn’t made its entrance yet, and almost all production is conducted in the traditional way. That does not mean that society is static. Changes can happen, but none of these will fundamentally modernize the country or increase living standards substantially.

2. Preconditions for take off

At this stage, mechanisms of mass production are introduced. The point of all efforts of development policies must be to reach this stage.

3. Take off This is the tipping point, when one really can say that the new production mode takes over. This happens due to an impulse. The impulse can be internal, as the 1848 revolution was in Germany, or it can be external, such as the high demand for Swedish products throughout the 19th century on the international market. 4. Drive to

maturity

Now the system matures and working methods are standardized and the cooperation of the various economic actors formalized. At this stage foreign trade really starts to become important.

5. Age of mass consumption

Now domestic demand reaches a level where it makes economic sense to produce for it. All the basic needs of the population are being covered.

Rostow’s phase model: After the Second World War (WWII), US economist Walt Whitman Rostow created an overview of

several phases of economic development which he believed a country needed to move through in order to reach the status of a fully developed country20_{. Rostow’s model is merely one of several similar phase models that were created between}

1945 and 1968, which were seen as explaining development in the view of the United States and its allies21_.

20 Rostow, The Stages of Economic Growth; Rostow, “The Take-Off Into Self-Sustained Growth.” 21 Wallerstein, “The Rise and Future Demise of World-System Analysis,” 193.

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In a certain sense, one may say that a later version of modernization theory was neoliberalism---the theory behind the policies employed by many countries since the 1980s---as it emphasizes the advantages of free trade and specialization (as preached by Ricardo22_{), yet it combines it with more}

general classical economic theory). This current version continues along the lines of modernization theory2324_{. Neoliberalism differs though in that it does not allow for technology transfer or much}

state intervention in the economy, as that would disturb market forces.

The World Bank (WB) and International Monetary Fund (IMF) are most closely associated with strategies for obtaining development according to neoliberal theories. During the 1980s, they set up

Structural Adjustment Programs (SAPs) with the stated goal of help countries remove their debt

and obtain development.

Opponents will claim that neoliberalism is not a real development strategy, as it’s really only supposed to guarantee that the country’s creditors are obtaining some pay back and that its mainly just aiming for a short-term goal of preventing socialism.

Soviet Union modernization

Also in the Soviet Union, now a much more stable and powerful country than in the time of Lenin, the ideas of modernization theory were popular in the aftermath of WWII. Different from western theories, it was here Soviet Union and not the United States nor Western Europe that was going to be the leader that would help develop other countries25_{. Following some of the early Marxist}

theories, it was a common view by Marxists in the Soviet Union to argue that many countries could not directly switch to socialism directly, but would have to go through a phase of transition by first developing an internal industrial capitalist system with a corresponding proletarian movement.

22 Ricardo, On the Principles of Political Economy and Taxation. 23 Sandbrook, “Bringing Politics Back In?,” 278.

24 Ricardo, On the Principles of Political Economy and Taxation, chap. 7. 25 Wallerstein, “The Rise and Future Demise of World-System Analysis,” 194.

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This meant that politically radical activists from countries that were mainly agricultural were prevented from establishing socialism. Yet to the degree that their democratic elections, they could participate in these26_{. Even labor union work was rather useless, as labor unions would represent}

mainly artisans with no hope of obtaining state power27_.

A difference between the model with the Soviet Union as center and western European countries as center was that the Soviet Union did not possess colonies, nor had it had these earlier. Those Third World countries cooperating with the Soviet Union mostly had the status of being a non-aligned country rather than allied status with the Soviet Union28_{, even if one could say that in practice they}

were allies.

Dependency Theory

When modernization theories failed to work as expected in bringing Third World countries in line with the developed countries in the 1950s, criticism of modernization started to develop. The main target for criticism of Dependency Theorists was the underlying premise in mainstream

development theories that the development in one country works independently of external influences from other countries29_{which thereby took up the second strand of Marx’ arguments.}

Dependency Theory covered several different sub-theories. Their proponents had in common that they believed the developed First World countries (core) were profiting from a wealth transfer from Third World countries (periphery). The model was sometimes refined to also include a

semi-periphery, which worked like a buffer zone between core and periphery30_{. The transfer from Third}

World to First world was mainly possible because the traded with very different produce. Third World countries would sell agro-products and raw material, while First World countries sold manufactured goods. Over time, the theorists claimed, the products sold by Third World countries

26 Palmer, “Carlos Fonseca and the Construction of Sandinismo in Nicaragua,” 96. 27 Gould, “`For an Organized Nicaragua’,” 354.

28 Wallerstein, “The Rise and Future Demise of World-System Analysis,” 194. 29 Wallerstein, 194.

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declined in value, whereas manufactured goods increased in value comparatively31_{. Additionally,}

the First World held a range of powers (military, media, etc.) with which they were able to manipulate the rest of the world into continuing as they had been.

Dependency Theorists could be divided into several subcategories. Within the institutions of the United Nations one could find the Structuralist Dependency Theorists linked to the United Nation’s

Comisión Económica para América Latina y el Caribe (CEPAL). They believed that the question of

dependency and unfavorable terms of trade could be resolved by allowing Third World countries to take over some of the production of manufactured goods through tax schemes known as import substitution which would put tariffs on certain imported manufactured goods so that a local industry could develop within that country to take over production of said machinery. For this to work, the countries would additionally need to obtain the technologies needed to produce said goods.

Radical Dependency Theory

A few years later, Dependency Theory in a politically more radical version was launched. Those who stood behind this version came from a variety of places and spoke to different audiences. Paul Alexander Baran (1909-64) wrote for western readers. His book The Political Economy of Growth32

was an early text, but one that would later be the inspiration of several of the more radical dependency theorists. In addition to the dependency between peripheral and core states and exploitation through countries trading with one-another, radical dependency theorists focused on exploitative relations within Third World countries. As they saw it, local elites, living in cities in the Third World were exploiting people in rural areas. They would network with the elites of First World countries through travels and studies in First World countries and would then be complicit in the exploitation of the poorest of their own country 33_.

31 Prebisch, The Economic Development of Latin America and Its Principal Problems; Singer, “The Distribution of Gains between Investing and Borrowing Countries.”

32 Baran, The Political Economy of Growth.

33 Johnson, “Economism and Determinism in Dependency Theory”; Gunder Frank, “La Estructura de Clases en América Latina.”

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According to Baran34_{, Japan was a special case, and the reason for it not being as underdeveloped as}

other Asian countries were at the time was that it had not been turned into a colony to one of the western countries at any time in its history. These radicals saw the reason for the difference in what Marx’s about the primitive accumulation of capital, which means that European elites already had built up capital wealth when the process of global interconnectedness and capitalist development started, and this would be an advantage they would carry with them.

One of the claims within the radical version of Dependency Theory was that there was not the same connection between growth of the overall economy and growth of wages in the Third World as there was in First World countries, because production in First World countries was usually directed as mass consumption in those same First World countries. An overall increase in wages therefore also generally meant an increase in sales. This was different in Third World countries where production was aimed at consumers in First World countries. Greater profits could therefore be made by lowering wages for workers as one would not have to fear a shrinking market to sell the products. The problem would also not be resolved by means of import substitution schemes, if these were aimed at luxury goods for local elites that the factory workers would not buy themselves35_{. This is}

the main reason why Import Substitution was a policy mainly by the less radical Dependency Theorists.

One Dependency Theorist, Cristóbal Kay36_{, went as far as saying that the fact that Latin America}

has become more dependent over time and that local elites generally have tried to obtain order through repression of popular movements show that these elites do not play a progressive role in society. The remaining options are then either a corporate-led fascism or a socialism that is despite the protests of local elites.

34 Baran, The Political Economy of Growth, chap. 5.

35 Biderman, “The Development of Capitalism in Nicaragua,” 7–8.

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Other radical Dependency theorists have concluded that under certain circumstances, a non-dependent capitalist development could be possible in peripheral countries. Such is the case of Theotonio Dos Santos37_{and Vania Bambirra}38_{, who claimed that if machinery and heavy industry}

would be entirely in the hands of national capital, the entire chain of development could develop within the formerly dependent country.

In the more recent past there have been fewer concrete conclusions as to what Third World

countries could do. For example, Samir Amin39_{writing in the 1980s criticized modernization theory}

for being too naive in its idea that capitalist development could simply be copied from the First World, as capitalist development in Third World countries would mainly benefit capitalists

worldwide, but he did not give much of a prescription as to what Third World countries should do instead.

Since the end of the Soviet Union and until this day, Dependency Theorists have had no clear answer as to how to achieve development in the Third World without running into the problems of modernization theory they criticized earlier. China has since obtained developed largely by means of some import substitution schemes at a massive scale, whereas the situation in Africa and Latin America has not progressed very much.

In the following chapters, I will look more in depth at the historic developments leading up to nationalizations in Mexico and Norway and how circumstances were fundamentally different for the countries given their position in the world system.

Other theories

There can be several alternative factors and theories that explain the difference of development in the countries – including measurable factors such as their relative size related to the amount of oil

37 Santos, “Socialismo y fascismo en America Latina hoy.” 38 Bambirra, Teoría de la dependencia.

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and military strength and less measurable factors such as differences in climate, culture and religion.

This thesis is not trying to prove that Mexico could have become Norway had it only been a core country or that there are no other factors that can explain parts of what happened. What this thesis is trying to show is that the position in the world system that these countries have has had a

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Development of Mexico and Norway

In this chapter I will present the general development of the two countries, Mexico and Norway, beyond the development of the electricity industry. This is to give an overall picture of the development of these countries and their position in the world system, and how they have developed over the time span.

Norway

For Norway, the relevant period is the 19th and 20th Century during which the country develops rapidly, and which leads to the nationalization of national resources and subsequently to

extraordinarily high levels of wealth. In the following sections, I will present the development of the Norwegian nation state, the economic development as well as the shifts in political balance.

National independence

Norway underwent several changes in affiliation during this period.

In 1807, the Napoleonic wars came to Scandinavia, with Denmark joining France and Sweden joining England. Until 1814, Norway was part of Denmark, generally ruled from Copenhagen, but in the period 1807-10 ruled by means of a committee in Oslo40_{as the war made it difficult to rule}

from Copenhagen. The committee functioned like a government, and when it was resolved, the position was replaced by a governor-general of Norway. In 1814, Denmark lost Norway to Sweden, but before Swedish troops could move in, the current governor-general was declared king of an independent Norwegian monarchy and gave the country a parliament and a constitution. Once Swedish troops did move in, the Swedish king decided to keep the parliament and constitution and have Norway and Sweden run as two countries under the same king.

In 1905, Norway obtained full independence also from Sweden and obtained its own king.

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Independence lasted until 1940, when it was occupied by Nazi Germany. The occupation ended in 1945. In 1949, the country joined the North Atlantic Treaty Organization (NATO), and in 1960 it was one of the founding members of the European Free Trase Association (EFTA). Different from its neighbors Denmark and Sweden, Norway never joined the EU, but since 1994, for all intents and purposes it has been part of the EU-bloc by being a signatory country to the European Economic

Area (EEA) agreement between the EU and three non-EU countries.

Economic development

Between 1800 and 1950, Norway developed from an agrarian society to an industrial society. While the total number of workers in agriculture and forestry only changed marginally, from 710000 in 1801 to 713000 in 1950, the population grew enormously, and agriculture lost its dominance. Statistics from 1801 show that 80.3% were working with agriculture and forestry, 5.7% were working with industry and 5.3% were working on the sea and with fishing. The remaining 8.7% of the population worked within government/bureaucracy, trade or were retirees/pensionsts. By 1950, these figures had changed to 21.7% working in agriculture and forestry, 34.2% in industry, 9.6% were working on the sea and with fishing. A substantial amount of 34.5% worked with government/ bureaucracy, trade or were living of rent/pension. Only 109,000 inhabitants lived in cities in total in 180141_.

While there were many hard years after the Swedish take-over in 1814 similarly to the rest of Europe, and some structural difficulties for Norway. Agricultural imports such as grain had previously come from Denmark and in sectors such as mining, where previously its 15 iron plants (in 1800) had been the foundation for much wealth building in Norway as they could export freely to Denmark, Schleswig and Holstein which all due to geographic circumstances had to import it, they were now faced with being part of a trade agreement with Sweden, which was 16 times as

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large and was in better shape both technically and economically. In 1827, iron exports made up only 27,000 ship pounds compared with 40,000 in 1807.42

The changed circumstances meant that the Norwegian economy had to adapt, and while it was challenging, it proved not to be impossible. By 1817, the agriculture sector was reported to have been growing faster in the previous decade than ever before (part of which was the introduction of the potato), and by 1830 it could supply all of Norway with food without imports. By the 1830s, copper exports reached the level of pre-war years and by the 1840s, the same happened for iron.43

One important change happened around 1827, when a law governing the relationship between Norway and Sweden regulated commerce between them. Goods transported via land were free of customs. Additionally, the Swedish king negotiated treaties on behalf of Norway with other nearby countries, such as Denmark and England (1826), Prussia (1827), Russia (1826)44_.

Clearly Norway was not the deciding part in the alliance changes and the economic consequences they had. Yet under both Danish as well as Swedish rule, Norwegian economic interests were to some degree acknowledged and Norway was able to grow an economy similarly as other central countries. The geographic proximity also meant that Norwegian economic elites were highly integrated with elites in Denmark and Sweden, both economically and socially, and this probably also had a lot to say for the type of development available for Norway.

And it continued its economic development this way. Besides the development of canals for the transport of export goods that I will look at in the chapter of the development of electricity in Norway, the development of railway lines as a priority for Norwegian politicians in the middle of the 19th Century. After some discussion in parliament on the dangers of letting foreign capital into Norway, an English plan for building a railway line from Oslo to Eidsvoll was approved in 1851,

42 Bergsgård, Frå 17. Mai Til 9. April, 48. 43 Ibid., 52–55.

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which was only four years after the first railway line in Denmark45_{and three years before Sweden}

decided to build rail lines between the three major towns Malmö, Göteborg and Stockholm46_.

Norway's economic development at this stage was not the same, but already comparable with that of its powerful neighbors.

In subsequent decades Norway did build up somewhat of an industry in areas such as textiles and nails and processing of wood47_{, and by the beginning of the 20th Century, electricity production}

became a central part of the Norwegian economy. During the Nazi occupation years, development continued and again, Norway was not treated as a colony in the sense that central economic interests and organizational structures were kept as they were, which ended up boosting the

company Norsk Hydro and putting it in Norwegian government hands after the war as we shall see. Norway grew in the 20th Century much more than its two neighbors, mostly due to energy

production that I will look at in subsequent chapters. By 2017, Norwegian GDP per capita was 37.6% higher than that of Sweden, with Sweden however catching up in growth at a rate where it would reach Norwegian levels within 15 years48_.

Political development

The period from 1814 until 2017 can roughly be divided into 5 periods in which different political currents dominated with some :

1. 1814-84: The "civil servant state". There were parliamentary elections, but not for political parties and parliament was never shifted out entirely. During this period, economic

liberalism with a limited and narrowly defined role for the state dominated. Private enterprise dominated and trade was as free as possible.

45 “Roskilde Station, Kongerigets Første Jernbane Og Lokomotivet Odin - 1001 Fortællinger Om Danmark.” 46 “Tåg och järnvägar.”

47 Bergsgård, Frå 17. Mai Til 9. April, 90. 48 “Norway vs. Sweden - Economy Comparison.”

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2. 1884-1935: Parliamentarism49_{dominated by conservative and liberal parties. While liberal}

ideology remained, the functions of the state expanded somewhat, and free trade was not given. During the inter-war years, protectionism throughout Europe meant that markets were more national.

3. 1945-1965: Social democracy dominates as the workers party governs. The state expands into many spheres of life where it had not been present before and it's a goal to level out differences in wealth. This period in Norway is similar to political developments in Sweden and Denmark at the time.

4. 1981-2018: Neoliberalism. The state leaves a greater amount of economic decisions to the free market and free trade dominates. Neoliberalism spreads not only through Scandinavia, but most of the world. The Scandinavian countries, and especially Norway, have a relatively high level of services to begin with and it continues to have higher levels of social services. These periods have to be seen as a backdrop to the nationalization efforts mentioned in the

following chapters. The initial monitoring and development of canals for commerce fell into the first and second period. The first nationalization wave then in the second period, and it was

therefore also contradictory — nationalization was supposed to only take place for a limited time in order to hand over to private enterprise, but it just does not work out that way. Government takeover of the shareholder majority of Norsk Hydro and the nationalization of oil falls into the period of social democratic rule during which nationalization is an integral part of government policy.

Mexico

For Mexico, roughly the same period is relevant for its development. Even though several key historic events seem similar, they played out differently in Mexico, largely due to its colonial history.

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National independence

Mexico started the 19th Century with a war for independence 1810-21 as a result of the Napoleonic wars. In contrast to Norway's handover to Sweden and subsequently independence from Sweden, Mexico's independence war was bloody, with killings and persecutions used as strategies to win the war50_{. Spain negotiated a border line with the USA and arrived at a settlement in 1819. This border}

line was then accepted by Mexico once full independence was declared two years later51_.

After independence, Mexico immediately needed to act as a separate country - dominated in the North by the USA who in 1845 took the greater part of Mexican territory and who almost took all of Mexico, and toward the South and East itself meddling in the affairs smaller Caribbean and Central American republics. Yet while Mexican support for different groups made a difference for those countries and groups, Mexico itself could not extract significant wealth or power from the relationship, while the US American takeover of Northern Mexico meant a loss of 50% of its territory52_.

Napoleon III of France installs Maximilian of Habsburg as Mexican emperor 1862-753_{. Since then,}

the relationship with the USA has been uneasy but mostly not directly confrontational.

Economic development

The establishment of Mexico meant the end of slavery54_{-- officially. Anglo settlers moving into}

Texas brought slaves with them even though this was unconstitutional in Mexico55_{. The result of the}

conflict -- that Mexico lost the area to the USA at a significant economic loss rather than being able to impose its own economic model on the immigrant settlers -- shows just how little control of its economy Mexico had during those years.

50 Landavazo, “El Asesinato de <em>gachupines</Em> En La Guerra de Independencia Mexicana.” 51 Kelley, “‘Mexico in His Head’: Slavery and the Texas-Mexico Border, 1810-1860,” 711.

52 Casanova, “The Economic Development of Mexico,” 192. 53 “Some Events in the History of Mexico and the Border.”

54 Kelley, “‘Mexico in His Head’: Slavery and the Texas-Mexico Border, 1810-1860,” 711. 55 Ibid., 713.

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The revolution was important in terms of redistributing land. In 1910, 1% held 97% of all land. Between 1915 and 1940, 1.7 million peasants were given land. And while the absolute number of people working in agriculture increased by 1.5 million between the revolution and 1980, the

percentage of the population changed from 72% in 1910 to 41% in 1970.56_{However, the revolution}

turned into a power struggle of decades of different fractions which made the Mexican state largely disintegrate. In the years 1928/29 the revolutionaries managed to unite in the Partido Nacional

Revolucionario57_{Partido de la Revolución Mexicana PRM and in 1946 to Partido Revolucionario}

Institucional PRI)58_{. In the 1930s Mexico started to work as a country again, and the constitution}

was finally enforced.

The nationalization of natural resources did have an economic impact. Economic growth between 1938 and 1980 was at least 5% per year, but with extreme unequal distribution to a degree where it hurt the living conditions of all Mexicans overall. Despite a per capita income of USD 2100 in 1980, nearly 50% subsisted at the margin of subsistence and almost half had no schooling.59

The same period is also when the Mexican population shifted from rural to urban: While in 1940, 35.1% lived in urban areas, by 1978 the urban population had grown to 64.9%.60

The GDP per capita of Mexico in 2017 was 51% of that of its former colonial power Spain and growing slower so that no catch-up would be in sight61_{, and it was only 33% of the GDP per capita}

of its northern neighbor USA62_.

Political developments

Mexico goes through several distinct politically ideological movements after independence:

56 Casanova, “The Economic Development of Mexico,” 192. 57 49–50.

58 Partido Revolucionario Institucional, “Historia de La Asociación.” 59 Ibid., 192.

60 Ibid., 195.

61 “Mexico vs. Spain - Country Comparison.” 62 “Mexico vs. United States - Country Comparison.”

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1. Initially, Mexico is ruled by conservative forces after the revolutionary war.63

2. In 1854, the liberal Benito Juárez takes power in Mexico and establishes a new federal Mexican state by means of a new constitution. Liberalism during this phase means both economic and social liberalism.64

3. In 1876, Porfirio Diaz takes power, and he stays until 1911. This period is contrasted to that of Juarez in that liberalism is now just limited to the economic sphere. Foreign investments are encouraged.65

4. In 1911, the Mexican revolution breaks out. Various revolutionary groups struggle for power, and only in the late 1930s does the Mexican government start function again.66

5. The expropriation of Mexican oil in 1938 marks the start of a longer stable period during which the Mexican state takes control over greater parts of economic life under the rule of what becomes known as the Partido Revolucionario Institucional (PRI) which governments until 2000.67

6. Similarly, to Norway, neoliberalism came to Mexico in the 1980s. At this stage Mexico had built up much less protection for its workers.

Mexican efforts of nationalization are linked directly to its period of revolutionary rule. Different from the Norwegian example, the nationalizations are prepared and are executed on purpose. They are also more confrontative than the Norwegian example, especially in the case of oil which is expropriated as part of dispute with the operating company as I will see in subsequent chapters.

Conclusion

Both Norway and Mexico went through a period of obtaining independence, they were both initially relatively weak countries vis-a-vis the countries they were dealing with. But while the economic

63 “Some Events in the History of Mexico and the Border.” 64 Ibid.

65 Ibid. 66 Ibid. 67 Ibid.

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interests of Norway as a European country or the center were still somewhat accommodated for and ultimately independence was granted without bloodshed, in the case of the peripheral country Mexico, no such concerns were taken. The countries of the two countries can therefore be said to line up with the theory of there being a world system in which countries occupy different positions.

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Nationalization and development of electricity in

Mexico

In this chapter, I will look at the development of the electricity industry in Mexico up to the point of nationalization. This will takes us from the development of privately funded water-based electricity production in profitable urban areas in the late 19th Century through a period of government-funded electricity production in non-profitable areas and tight regulation in profitable areas during the period 1937-60 and finally a fully government owned electricity sector that has lasted until current times.

The development of the electricity net in Mexico can be divided into three distinct phases: During the first phase the electricity net was developed in central parts of the country by private actors. In 1937, electricity was formally nationalized, but it was not before 1949 that the government took on development of electricity infrastructure in more rural areas in which greater investments were needed through the Comisión Federal de Electricidad (CFE). The third phase, starting in 1960, consisted of the government taking over the private company, that had been producing electricity for the central cities, the Mexican Light & Power Company, Ltd., and converting it into the government owned Compañía Mexicana de Luz y Fuerza. The third phase can be subdivided into several sub phases in which the state reorganized the former privately owned companies until finally in 2009 it was dissolved into the CFE.

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Government control over waterways and concessions

The Mexican Constitution of 1857 only gave the Mexican Federal Congress the right to control the access to Mexican waters for foreign troops stationed for more than one month68_{. This changed in}

1888, when laws gave control to the federal government over all existing rivers and allowed the executive branch of the federal government to grant usage concessions for irrigation and industrial purposes, and 1894, when the law was modified to allow for government expropriation of territories so that they could be sold for the installation of waterpower facilities69_{. Concessions were granted to}

both Mexican and foreign investors. However, the initial grantees were not always the ones who ended up making use of the concessions as a market for speculators arose in the last few years before 1911 with prices rising many times higher than what they had initially been. The 1894 legislation had also included the ability for the state to control electricity prices. However, the government never chose to do so70_.

Foreign investors take over the development of Mexican

electricity

At the end of the 19th Century, electricity was used in Mexico for lightning within the mining sector as well as a few urban centers. In the period 1900-10, British, Canadian and US investors invested $75 million USD on electricity in the country which allowed for the building of forty plants and employment 10,000 people. In the period 1905-11, four main systems were set up in the country by these foreign investors, and most Mexican owned plants were bought by them. Foreign firms had also taken control over the most profitable concessions either by buying them from previous, Mexican owners, or by obtaining direct grants from Mexican President Diaz.71

68 Congreso general constituyente, “Constitución Federal de Los Estados Unidos Mexicanos,” XVI.

69 Cisneros, “El Marco Legal e Institucional Del Agua En Los Siglos XIX y XX”; Wionczek, “The State and the Electric-Power Industry in Mexico, 1895-1965,” 528.

70 Cisneros, “El Marco Legal e Institucional Del Agua En Los Siglos XIX y XX”; Wionczek, “The State and the Electric-Power Industry in Mexico, 1895-1965,” 528.

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The development of these foreign-owned companies from core countries came without much resistance from Mexican authorities. The motive for the companies to establish themselves in Mexico seems to have been exclusively profit, which is why electric infrastructure were only developed in those parts of the country where they were profitable.

The establishment of the Mexican Light and Power Company, Ltd.

The company that controlled electricity production and distribution for the main cities of central Mexico up until 1960, the Mexican Light and Power Company, Ltd. was initially Canadian. In 1902 a Canadian syndicate bought the Necaxa waterpower concession (located around 100 miles from Mexico City) and registered the company in order to make use of it. The company then bought purchased the main electric plant of Mexico City and absorbed rival companies so that it could operate as a monopoly in the Distrito Federal (DF) that makes out most of Mexico City. Thereafter it started developing hydroelectric projects in the Necaxa Gorge72_.

In the following years, Canadian investors invested in tramway and electrical companies in other major cities, such as Pachuca, Puebla and Monterey. During this time, foreign investments in Mexico came from several different western countries, but they divided their area of investment by country: German investments were in manufacturing, French and Dutch investments went into financing public debt, US investments went into mining, British and Canadian investments went into public utilities. The combined share of Great Britain and Canada of foreign investments in the area of public utilities (telegraphs, telephones, water, light and power systems) was 89% in 1911.73

The Canadian investments in public utilities were not limited to Mexico. Three different groups of competing Canadian investors in Halifax, Montreal and Toronto invested in utility companies throughout Latin America and the Caribbean at the time. All three groups were connected to the US American/Canadian engineer and entrepreneur Fred Stark Pearson who scouted for opportunities and in these countries and presented them to the Canadian investors. Foreign investments were at

72 Armstrong and Nelles, “A Curious Capital Flow: Canadian Investment in Mexico, 1902-1910,” 178. 73 Armstrong and Nelles, “A Curious Capital Flow: Canadian Investment in Mexico, 1902-1910,” 178.

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this time welcome and encouraged by the Mexican government. The shifting between different investments groups had to do with disagreements between Pearson and the investors. Investments for the utility companies beyond the initial investors was in several cases done by issues bonds in London.74

It is noticeable that the foreign investments and the running of the company were shaped by miscalculations due to knowledge gaps. The most important of which was missing accurate

information about stream flow data, which meant that a $5 million mortgage bond was not enough to cover construction cost. A drought during construction made it clear that an additional system of tunnels and storage reservoir was needed. Additionally, the city of Mexico continued to grow, including demand which meant that continuous investments were needed, and the initial investors could not take home initial profits as fast as they had expected. Nevertheless, even though returns in the Latin American utility sector averaged only 3% in the years before 1913, portfolio investors in the Mexican Light and Power Company would have obtained an annual return of 13% in the period 1903-1075_{. It must be noted that there is some controversy as to profitability in those years with}

Mexican sources citing higher figures than foreign ones. There are claims that there were problems collecting payments from municipal authorities76_{. The bottom line for the electric companies was}

priority, while the economic development of Mexico came second.

One can get an idea about ownership distribution in these early years by looking at a partial

shareholder's list from early 1908: the ten largest shareholders held 56% of shares, the ten following shareholders held another 10%. The largest of which was Sperling & Company, a London merchant banking firm. Eighteen of the following nineteen largest shareholders were Montreal or Toronto based bankers, promoters and brokers. 21% of common stock were held by small-scale capitalist. Until 1907 the company raised almost all capital in Canada and after that almost all in London.77

74 Ibid., 179–86. 75 Ibid., 185–94.

76 Wionczek, “The State and the Electric-Power Industry in Mexico, 1895-1965,” 529–30.

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It is no wonder that these international investment companies were focused merely on direct returns to their shareholders. It was the weakness of Mexican authorities that meant that the companies could not be forced to invest in ways that would have increased overall Mexican development.

Differential pricing

The linking of ownership in energy-producing and energy-consuming industries such as the tramway did that the power companies dealt with three types of consumers: third party private companies, municipalities and industries they were linked with themselves. And pricing was set separately for all three, with industries they had ties to themselves paying the lowest possible tariff. Initially, this led to a protest on the part of municipal authorities, which felt they were being ripped off. Then those Mexican industries without ties to the power companies started complaining about the foreign owned monopolies. In 1910, shortly before the revolution lead to long-term president Porforia Diaz'es fall, conditions for granting hydroelectric concessions were tightened.78

This shows that not only were investments made where it was most profitable without concern of overall Mexican development, also at the point of sale of electricity, the interests of the Mexican population of electricity at home were put after all other interest. It is not a huge surprise that eventually there would be pressure for government to change toward taking a more active role to represent the interests of the Mexican population, which both these last-minute actions under Diaz show, and the Mexican revolution itself.

The revolutionary years (1910-38)

The period 1910-1925 is considered the revolutionary period in Mexican history when the state hardly functioned, but the high point of the revolution is nowadays often considered to be the nationalization of the oil in 1938 after which the modern Mexican state solidified itself. While proclamations were made and a law was passed to make water government property, and the overall direction of the country was changed in the long run, during this period, but not much was enforced

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for the time being, and the de-facto situation for privately owned hydro-electrical did not change a lot. In the first few years, expansion projects started during the previous period had to be carried out. During the 1920, this led to growth for the sector and for 4 million people to become electricity consumers -- about 20% of the population. The power companies during this time expanded in traditional urban areas with high population density and sites of large-scale industrial production where demand was relatively easy to find. It did not expand much into parts of the countryside where higher investments would have been needed, and lower yields would likely have been obtained.79_{For these foreign owned businesses, priorities did not change with the revolution until}

they were forced to do so by the new authorities.

In 1922, the National Commission of Driving Force (Comisión Nacional de Fuerza Motriz, CNFM) was formed. This initial instrument was given the task of create a list of estimates of electricity needs, likely future demand, the current development state of water resources. The CNFM was met with hostility on the part of the electricity producers, but by 1926 it managed to present a project of law that would allow for federal control of all stages of hydroelectric power generation rather than just control over new concessions, and also would give the federal government control over thermo-electric plants operating under state and municipal concessions and franchises.80

The 1926 law did not come into force until 1928, and when it did, it was at a time when several smaller Mexican businesses had become electricity consumers. The textile industry emerged as the third largest electricity consumer after the mining and petroleum industries. In 1928-9, a major shift in ownership happened when the US company American & Foreign Power Company bought up all transmission and production facilities in Mexico outside of Mexico City. The Mexican Light and

Power Company stopped expanding in 1930, whereas the American & Foreign Power Company

continued investing into the electricity market until as late as 1935.81

79 Ibid., 533. 80 Ibid., 534. 81 Ibid., 535–36.

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The governments direct entry into the electricity sector happened over the following years. At first, a new law in 1929, thought to make it impossible to hold onto concessions immediately starting on the construction of power plans. In 1932, President Rodríguez announced rate controls on electricity for small and medium consumers. However, the largest company, the Mexican Light and Power

Company, refused to go along with it, arguing it was unconstitutional. The government's response to

this was to ask Congress to amend the constitution to make it clear that the electric power industry fell under the jurisdiction of the federal government. By 1933, the governing National Revolution

Party (Partido Nacional Revolucionario, PNR) wrote a five year plan for the period 1934-9 and it

stated that the amount of electricity supply should be great enough to make it possible to build industrial and agricultural businesses with it, rather than to ensure the profitability of the electric company, and that the distribution of electric power should cover the entire country so that new industries could develop in areas previously not used for industrial production. The plan also called for the government to organize electricity production itself. This last promise was fulfilled in 1937, when the government established the Federal Electricity Commision (Comisión Federal de

Electricidad, CFE) which took on production and distribution of electric power in rural areas.82

The step of creating the CFE meant finally that the economic development of the general population was made a priority. But with the state taking on only the production of electricity for the less- and nonprofitable areas, it also meant that the state would take on more of an economic burden without being able to cover losses in the countryside with earnings in urban areas.

Simultaneous private and public production

Over the following 23 years, electricity production in rural areas happened through the CFE and in urban areas it happened through the remaining private companies. Especially the development of the two remaining foreign private was however strictly controlled by the government. In 1939, both invested in their Mexican installations for the first time since 1936. But a rate increase granted in

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the summer of 1939 of Mexican Light and Power Company was subsequently suspended by the President and when it was finally granted, it was only after the company changed administration and the company was obligated to reinvest increased earnings in its Mexico City infrastructure.83

Meanwhile, the CFE expanded its operations - first by greater federal appropriations, then by a 10 percent tax on electricity consumption. Unexploited concessions were rescinded in the 1930s. The CFE started developing these and inaugurated its first production facility in 1944. By 1945 it had a production capacity of 50,000 kw of electricity of a national total of 700,000 kw84_{and by the 31st of}

December 1959 more than 1,072,880 kw - out of a total national capacity of 2,839,676 kw85_.

National companies had capacities at this time of 700,000 kw. Power distribution remained to a high degree in the hands of the two foreign companies, which bought around 75% of total production from the CFE in the period 1944-59. This was a period of high growth in energy consumption by consumers - increasing at around 11% per year.86

Even though at this stage power production and distribution was much more controlled by the Mexican government than previously, the fact that these companies stopped new investments must have meant a less than perfect development of their infrastructure, especially given the high growth rate of electricity consumption. The government may have been able to improve the outcome for Mexican consumers, but it did not fully mitigate the effect of having foreign companies with other priorities than itself which it could not fully control a vital part of its infrastructure.

1960-61: Nationalization takes place

Finally, in 1960, the Mexican government bought both foreign owned companies. The American & Foreign Power Company was bought for USD 65 million in April 1960, including outstanding debts of USD 34 million. Of the purchase price, USD 65 million were to be paid out over a period of 15

83 Ibid., 543. 84 Ibid., 546.

85 Mata, “Los Servicios Públicos En Relación Con La Tecnología, La Economía y El Derecho En Los Países Poco Desarrollados,” 398–99.

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years with a 6.5% interest rate and under the condition that the amount be reinvested into other sectors of the Mexican economy. In that sense the sale did not represent an abrupt end to the company's presence in Mexico. It simply meant a regulated transfer from one area of business to other types of economic activities. Mexican Light & Power Company was purchased directly from the Belgian holding company Sofina as well as individual investors for USD 52 million. The purchase also included a debt of USD 78 million. All remaining minor privately owned companies were bought out in 1961.87

The reason given by the government for nationalizing the companies that were already heavily controlled business was one related to advantages of integration. President Adolfo López Mateos declared upon purchasing Luz y Fuerza:

[I]n order to definitively integrate the national system of generation, distribution and supply of electric power, and of the Mexican people being the fifth owner of the one produced, we have acquired the Compañia Mexicana de Luz y Fuerza Motriz, SA, and its subsidiaries, with an installed capacity of 585,000 kw.88

Nationalization at this stage was merely a small and positive change for the foreign capital involved, which is why it did not protest. Had the same measure been taken in 1937, the outcome may have been quite different. This final, relatively friction-less transition had meant 23 years of forcing the companies to run the companies in ways they were not interested, and therefore likely did not do at their best.

Post nationalization events

Initially, the company structures remained intact, even though all parts were now state run. In the following decades, several reorganizations and border markings between the CFE and the

government companies took place. In 1985, a new division of the country between Luz y Fuerza

87 Ibid., 550–51.

88 Mata, “Los Servicios Públicos En Relación Con La Tecnología, La Economía y El Derecho En Los Países Poco Desarrollados,” 398–99.

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and CFE are being drawn, resulting in Luz y Fuerza losing more than 50% of its original territory. As part of a dispute with a labor union at Luz y Fuerza, on the 10th of October 2009, the Federal Police took over installations of Luz y Fuerza as a total liquidation of the company with the CFE taking its place is announced.89

This final take-over was controversial at the time, as it was seen by many as a possible first step of privatizing rather than a needed step to provide smoother running of the government’s electricity services.

Conclusion

In this chapter we have gone through the development of electricity in Mexico and concluding with the nationalization of the industry.

As we will see in the chapter on the nationalization of the Mexican oil industry, the nationalization of electricity was a relatively peaceful type of nationalization when compared with the

nationalization of petrol. This seems to have been possible through careful control over the foreign owned companies and by letting the state expand in areas where there were no private interests initially. These were disadvantageous investments to the state, yet even when private business was allowed to run electricity production in the profitable areas---under control---the foreign owned private companies did not reinvest.

This highlights the conditions of Mexico as a peripheral country where companies come to extract value without much concern for the local population or politics – to the degree they can get away with.

Nationalization of electricity and oil in core and periphery: Norway versus Mexico

Degree Project with Specialization in Historical Studies