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A new Mexico is rising alongside the old

MEXICO CITY—A grainy 1957 photograph shows men in typical peasants' hats running to catch a dilapidated bus near the intersection of Insurgentes Avenue and Paseo de la Reforma in central Mexico City.

Today, that intersection is filled with young men and women who chat and send text messages on cell phones as they wait at subway-style stations for gleaming new buses that cruise past congested traffic in bus-only express lanes.

Blocks away, business executives with laptop bags slung across their chests hurry into the 55-story Torre Mayor, Latin America's tallest building, where they'll watch CNN en Espanol on digital screens as the elevators sweep them to their offices.

Lost in all the publicity about the rising tide of poor Mexican workers besieging the U.S. border in search of better-paying jobs is one fact: From Tijuana on the border with California to Merida in the Yucatan peninsula, oil-rich Mexico is booming. Inflation remains low, economic growth is steady and salaries are rising. The Mexican government has more than $76 billion in foreign-currency reserves, the most in its history.

Mexico's annual per-capita income has more than doubled in the last decade, to more than $7,000, the highest in Latin America. The inflation rate is less than 3.5 percent per year, lower than the United States'.

Economic analysts credit the boom to high oil prices, the North American Free Trade Agreement among Mexico, the United States and Canada, and the pro-business policies of the current administration, led by President Vicente Fox of the National Action Party, or PAN in its Spanish initials, and of the previous three under the long-dominant Institutional Revolutionary Party (PRI).

Mexico's new wealth still coexists with its familiar poverty. The eastern neighborhoods of Mexico City and the towns and villages east of Benito Juarez International Airport are as dilapidated and poor as they were decades ago.

Although it's impressive, Mexico's economic expansion has been far less than the country needs. Analysts say that while the economy is creating 180,000 jobs annually, the growing population demands more than 1 million, hence the huge migration to the United States.

The stark choice that Mexicans face as they choose their next president July 2 reflects the gap that remains between rich and poor.

One of the two leading candidates, Andres Manuel Lopez Obrador of the Party of the Democratic Revolution (PRD), is a harsh critic of the policies that many think have contributed to the booming economy. Recent polls indicate that he's in a virtual tie with the PAN candidate, Felipe Calderon. The PRI's candidate, Roberto Madrazo, is running third, and few think he has much hope of winning.

The polls make it hard to predict the winner. Earlier this month, Calderon had a slight advantage over Lopez Obrador in one survey but two others showed Lopez Obrador ahead. None of the surveys gave either candidate an edge greater than the margin of error.

Knight Ridder interviews with more than 30 voters in the past two weeks indicate that those who support Calderon believe that he'd maintain Fox's pro-business policies and Lopez Obrador wouldn't.

Those who favor Lopez Obrador unanimously cited his promise to look first for ways to improve the lot of the poor.

Mexico has joined the global economy since NAFTA took effect in 1994. Convenience stores known as Oxxos now compete with 7-Elevens, and traditional Mexican chain stores vie for customers with Wal-Mart, Costco, Home Depot or Office Max. The Torre Mayor building on Mexico City's Reforma Avenue, which opened in 2003, cost Canadian business magnate Paul Reichmann $275 million to build.

Metropolitan Monterrey, long Mexico's business heart, now boasts one of Latin America's wealthiest municipalities, San Pedro Garza Garcia, where the streets are lined with skyscrapers, exclusive shopping malls, and BMW and Mercedes-Benz dealerships.

Places that once were little more than rural towns have become major business centers. In San Luis Potosi in central Mexico, cargo planes bearing overnight packages and freight land at the airport, and expressways connect the elegant colonial center with industrial and shopping districts. In Toluca, an hour's drive west of Mexico City, the airport now offers international flights, bypassing the chaos and congestion of the capital, and authorities plan to spend more than $50 million to expand the runways.

Santa Fe, built on the site of an old landfill in Mexico City's western suburbs near the Toluca airport, is covered with gleaming office towers and expensive designer residential areas. A three-bedroom condo costs $300,000.

Mexico's literacy rate grew from 65 percent in 1960 to 90 percent in 2000, according to the National Statistical Institute. Although educated Mexicans remain a minority, they're a larger one. In 2000, 19.1 percent of Mexicans older than 15 had completed high school, a vast improvement over 2.1 percent in 1960. Another 11 percent had gone on to college; that number was 1 percent in 1960.

The country's gross domestic product has been growing at about 1.9 percent a year. That's lower than the almost 4 percent of more than six years ago, but the peso is holding steady against the dollar and there seems to be no fear that the economy will collapse as the president's term ends, something that's happened more than once in the last 20 years.

"The economy has improved overall," said Cesar Castro Quiroz, an analyst at the Center for Analysis and Economic Projections for Mexico, an economic-forecasting company. "We are much better off now than we were in terms of government accounts, management of the foreign debt and general economic stability, with the highest reserves in history.

"The problems that remain are in the generation of jobs and the overall annual economic growth rate."

For many Mexicans, though, life has been getting better.

"My family and I are certainly better off today thanks to globalization and the opening up of the Mexican market," said Faustino Galarza, a self-employed business consultant in Mexico City who makes more than $100,000 a year, buys a new car every four years and owns property in Mexico and abroad.

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(c) 2006, Knight Ridder/Tribune Information Services.

PHOTOS (from KRT Photo Service, 202-383-6099): mexico-elite

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