Quality of education is a determining factor in a nation's competitiveness. Although Mexico has made tremendous progress toward achieving universal basic education, school quality has not kept pace with enrollment increases, especially in rural areas. Innovations at the federal and state levels to raise the quality of basic education in Mexico include decentralizing the education system, thereby giving the states more control over education, and creating the Carrera Magisterial, a program of incentives and professional development for teachers. The first part of this paper shows that early in their professional lives, teachers in basic public schools are better paid than other comparable groups. The second part of the paper analyzes determinants of student achievement. Findings show that short-term teacher posts had a negative impact on learning achievement. Pedagogical efforts and teacher answers to student questions were highly correlated with greater learning achievement. Students in schools with a high degree of supervision by the school principal achieved better scores. Teacher training was most effective when targeted toward increasing teachers' practical experience and developing content-specific knowledge. Finally, teacher enrollment in the Carrera Magisterial program had a positive relation with learning achievement. Appendices present the National Agreement for the Modernization of Basic Education, data from the 1997 primary education assessment survey, definitions of variables, and determinants of mathematics achievement scores in fifth grade in urban and rural areas. (Contains 23 references.) (TD)