This article examines the effects of the North American Free Trade Agreemen
t (NAFTA) on Mexico's agricultural economy, with particular emphasis on the
role of the government in economic restructuring aimed at privatization an
d global competitiveness. Government policy and practice have sought to rev
italize select agricultural sectors that have faltered with the opening of
the Mexican economy. This process will be explored through the analysis of
the shifting relationship between the state and local elites in the northwe
st highlands of Michoacan, an area dominated by small-scale dairy fanning.
Much of rural Mexico has a long history of powerful caciques (local politic
al strongmen) and their patronage networks, that have arisen in the service
of state interests only to be replaced when political-economic conditions
change. In this instance, neoliberal reforms have resulted in the reconfigu
ration of power and authority, and the emergence of new-style techno-caciqu
es-well-educated political and economic entrepreneurs with nonlocal connect
ions and aspirations. The case underscores the contradictions and problems
with neoliberal development operationalized through what are effectively ol
d institutional forms.