The government sets the overall size of the military budget, but the actual allocation of funds to various activities and purchases is largely determined within the defense ministries. Little information is made available on individual expenditure categories.
Because of exchange-rate variations and scarcity of data, it is difficult to establish budgetary trends and annual expenditures on defense. According to The Military Balance
, the defense budget for 1996 was 16.6 billion new pesos (NMex$; for value of new peso--see Glossary), equivalent to US$3.0 billion. This figure compared to budget estimates of 1.577 trillion pesos (US$641 million) in 1989 and 1.908 trillion pesos (US$678 million) in 1990. No explanation was offered as to why the defense budget appears to have more than quadrupled between 1990 and 1996.
Data published by the United States Arms Control and Disarmament Agency (ACDA) show higher levels of spending on defense, which, according to ACDA figures, averaged about US$1.5 billion annually during the decade 1983-93. The peak levels of spending were between 1985 and 1987, when levels of about US$2 billion were recorded. As ACDA notes, data on military expenditures are of uneven accuracy and completeness. In addition to accuracy problems caused by sharp variations in exchange rates, capital spending and arms purchases may be omitted in official data.
Based on data from The Military Balance
, military expenditures were 0.9 percent of gross domestic product (GDP--see Glossary) in 1995. Military expenditures amounted to US$17 per capita in that year, reversing a declining trend that saw per capita expenditures drop from US$20 in 1985 to US$13 in 1991. The economic burden of the Mexican military establishment is comparable to the average expenditure for Central American countries.
Domestic Defense Production
Mexico has had a small defense industry since before the Revolution. In 1996 the defense industry consisted largely of the production of small arms, ammunition, propellants, and uniforms in government factories. As part of the modernization program launched in 1976, the armed forces redirected their efforts toward attaining a degree of self-sufficiency. The General Directorate of Military Industry drew up plans for production of large military systems, in cooperation with foreign arms manufacturers. The major expansion originally envisaged had to be curtailed, however, because of the economic difficulties of the early 1980s, and projects discussed with West German, Israeli, and Brazilian defense industries involving coproduction of armored vehicles were abandoned. The country's military industry has never reached the level of Brazil and Argentina, the other major Latin American producers of defense-related matériel.
Under a coproduction agreement with West Germany, the Mexican defense industry began mass-producing the standard infantry G-3 automatic rifle in the early 1980s. At the same time, the state-owned Diesel Nacional truck factory began manufacturing three-quarter-ton trucks for military use as well as the DN-3 and DN-5 armored car, derived from the United States Cadillac-Gage V-150 Commando. There were periodic reports of negotiations with foreign producers to cooperate in the manufacture of light and medium tanks, but questions of financing and the availability of special steel intervened.
Between 1972 and 1982, the government allocated considerable funds to the industrial sector for scientific and technical development related to military uses. In 1982 a telecommunications network using telex equipment was built to link military zones with the headquarters of the Secretariat of National Defense in Mexico City. The armed forces also began developing short-range, three- to twelve-kilometer, surface-to-surface missiles, but never reached the production stage.
Since the Revolution, Mexico has had an aircraft industry that produced a number of military models--both original designs and licensed manufactures--that formed part of the air force inventory until the 1960s. In an effort to revive the local aircraft industry, Mexico held discussions with both Brazil and Israel to produce trainer and light transport aircraft under license, but plans had to be shelved for financial reasons.
Mexico's major shipyards at Tampico on the Gulf of Mexico and Salina Cruz on the Pacific Ocean have been involved in the construction of patrol craft and auxiliary vessels. The largest program, involving the manufacture of Azteca-class patrol craft, was carried out under a licensed production agreement with a British firm.
Data as of June 1996