Political Cycles, Electricity Policy, and Mexico's Economy

ABSTRACT Electricity reform in Mexico should stimulate economic growth, improve energy efficiency, and reduce greenhouse gas emissions. This article evaluates the successes and failures of reform and draws lessons across political cycles by analyzing changes in political dynamics—often tied to policy reversals—and the legal framework during the pro‐market period (1989–2018). These elements help explain trends in electricity demand and policy development. The study identifies key factors influencing the energy sector, including the transition to renewables, modernization of infrastructure, and the ability of both the state and market to meet rising electricity demand. Findings indicate that Mexico's energy reforms experienced a pro‐market wave from 1989 to 2018, followed by a significant policy shift under President AMLO, which weakened the 2013 energy reform and earlier policies. Despite these reversals, the sector remains attractive to private investors. The adoption of a new pro‐market growth model during the earlier phase influenced investment rates in the electricity sector significantly. Overall, while policy continuity has been challenged, particularly under recent administrations, the reforms have had lasting effects on investment patterns and sector modernization, highlighting the complex relationship between politics, law, and economic development in shaping the future of electricity in Mexico.