Illustrated with photographs, cartoons and charts, this essay provides background information on the Mexican political system and economy and discusses the main issues confronting the United States in its relations with Mexico. The essay was written to provide interested citizens with background information on important foreign policy questions. As the institutional heir to the Mexican Revolution of 1910, the current government of Mexico and its semiofficial party, the Partido Revolucionario Institucional (PRI) have exerted a virtual monopoly on political power. Mexican Presidents who rule for nonrenewable six year terms command supreme authority. However, the authoritarian Mexican political system does provide some representation for all the people. The PRI is organized around three distinct sectors: one for peasants, one for workers, and one for the popular sector (almost everyone else). Although its economy has been growing since World War II, Mexico is faced with many internal problems including unfair distribution of wealth, underemployment, and a high rate of demographic growth. In economic relations with the United States, Mexico faces a constant dilemma. On the one hand, Mexico stands in need of North American trade and investment in order to obtain desirable levels of growth; on the other, Mexico does not want to surrender control of its economy. Another central issue in Mexico's relations with the United States is the exploitation of Mexico's recently discovered reserves of oil and natural gas. The most delicate set of problems, however, is the flow of Mexican citizens into the country. Aside from its economic dimension, it touches social and psychological sensitivities on both sides of the border. (Author/RM)