Diaz's strategy of export-oriented growth led to Mexico's rapid integration into the world economy. The modernization program was based on exploitation of the country's natural resources, using cheap domestic labor and foreign capital and technology for export production.
Foreign capital fueled dynamic growth, and an expanding rail network promoted export agriculture, manufacturing, and mining. Agriculture and livestock export products expanded to include cattle and cattle hides, coffee, cotton, henequen, sugar, vanilla, and chicle. Railroads allowed the exploitation of new land in the north for cotton cultivation and enabled Mexico to double its cotton production between 1887 and 1910.
The Díaz regime encouraged manufacturing through export incentives, high protective tariffs on foreign manufactured products, low transportation costs, and abolition of the transactions tax on business. The number of industrial enterprises--most of them heavily backed by United States, French, German, and British investors--grew rapidly, and the volume of manufactured goods doubled between 1877 and 1910.
The railroads also contributed to the revival of mining because they provided the only feasible means of transporting huge amounts of ore. Legal reforms in 1884 lowered taxes on mining and allowed foreign ownership of subsoil resources, spurring a large increase in United States and European investment in Mexican mines.
Society under the Porfiriato
Ironically, Mexico's economic success during the Porfiriato had negative social consequences. Although the economy grew at an average annual rate of 2.6 percent, real income per capita had recovered only to pre-1821 levels by 1911. After 1900 unemployment increased as mechanization displaced artisans faster than unskilled workers were absorbed into new productive enterprises. Additionally, real and financial assets were increasingly concentrated in the hands of a few local and foreign investors.
The rural peasantry bore most of the cost of modernization. Government seizure of private and communal land increased the landless rural population and led to further concentration of land ownership. Taking advantage of an 1883 land law intended to encourage foreign investment, by 1888 land companies had obtained possession of more than 27.5 million hectares of rural land. By 1894 these companies controlled one-fifth of Mexico's total territory. By 1910 most villages had lost their ejidos
(communal land holdings--see Glossary), a few hundred wealthy families held some 54.3 million hectares of the country's most productive land, and more than half of all rural Mexicans worked on these families' huge haciendas.
The modernization program was also brought about at the expense of personal and political freedom. Díaz made certain that "order" was maintained at all costs for the sake of "progress." Force was used whenever necessary to neutralize opponents of the regime. Freedom of the press was nonexistent. The army and the rurales
became the forces of repression for the maintenance of the Porfirian peace during the Porfiriato. Mock elections were held at all levels of government, while Díaz appointed his loyal friends as political bosses. Despite the modernization, Mexico remained a predominantly poor and rural country, and class stratification became entrenched.
The wealth that flowed into urban areas during the Porfiriato fostered the growth of an urban middle class of white-collar workers, artisans, and entrepreneurs. The middle class had little use for anything Mexican, but instead identified strongly with the European manners and tastes adopted by the urban upper class. The emulation of Europe was especially evident in the arts and in architecture, to the detriment of indigenous forms of cultural expression. The identification of the urban middle class with the European values promoted by Díaz further aggravated the schism between urban and rural Mexico.
Data as of June 1996