With less than four years left in his term, Mexico's President Vicente Fox looks increasingly like a lame duck. To his credit, he has brought honest people into government, cracked down on narco-trafficking, backed a freedom of information act, and quieted the Zapatista guerrillas in southern Chiapas state. Still, a medley of factors-poor relations with Congress, an inability to set priorities, a quixotic management style, intramural cabinet fights and spillover effects from a sluggish American economy-have contributed to the deadlock and drift that beset his administration.

But even as Fox slogs through a political quagmire, a basketball-playing labor leader, a law-and-order impresario and a Rocky-like swat team commander have shown that change can be accomplished at the state level. This unlikely trio has transformed the state of Sinaloa from a narco-dealer's paradise to a magnet for entrepreneurs. As a result, this carrot-shaped province hugging the Gulf of California in northwest Mexico has attracted, as of November 2002, 227 new businesses, totaling more than $700 million in investment since 1999. While much of the country has remained bogged down in a protracted recession, sun-baked Sinaloa has led the nation in job creation during the first quarter of this year and attained the number-one ranking among 31 states for slashing red tape. Who are the men responsible for this turnabout? How have they achieved so much despite a disquietingly high murder rate and an abundance of corruption and narco-clans? Does Sinaloa's experience hold any lessons for the rest of Mexico or for the developing world in general?

The Politico

Changes began in the state of Sinaloa soon after basketball aficionado Juan S. Millán Lizárraga swore the gubernatorial oath nearly four years ago. A former announcer who worked his way to the top of the Radio Workers' Union, the indefatigable Sinaloan became a leader in the Confederation of Mexican Workers (CTM), the nation's largest labor organization. Traditionally, all ctm members were automatically affiliated with the Institutional Revolutionary Party, known as the PRI, which dominated the country's politics for 71 years until opposition-candidate Fox captured the presidency in 2000. But Millán soon acquired a reputation as a maverick among the "dinosaurs" who ran the lethargic ctm. This image sprang from Millán's attempts to forge alliances with other labor centrals, while working with the private sector to link higher compensation to improved efficiency, productivity and quality. The pay-for-performance concept was as alien as square tortillas to union bosses who came to power within a statist, authoritarian regime that favored union shops, featherbedding, payola for ctm honchos and workplace tranquility for coddled businesses.

Millán's independent streak nearly ended his political career in 1989. With the backing of Sinaloa's labor movement, he had just completed a six-year Senate term and was presiding over the local PRI elite. With negotiations over the North American Free Trade Agreement hanging fire, then-President Carlos Salinas decided to show skeptics in the U.S. Congress that Mexico had shed its corrupt, single-party dictatorship, and Salinas cavalierly selected Sinaloa as the venue to drive home this point. Specifically, he agreed to allow the pro-Catholic, middle-class National Action Party (PAN) to "win" the mayorship of the resort city of Mazatlán. Although himself no political puritan, Millán-convinced that the pri had won fair and square-raised unshirted hell at this Machiavellian ploy. He even proposed having the ballots re-counted publicly at high noon in the city's central plaza. When Salinas fobbed off this suggestion, Millán promptly resigned his party post. Once Salinas left office, however, Millán returned to national prominence, serving as the pri's secretary general before winning a party primary en route to the Sinaloa statehouse. Even though anathema to some of ctm's diehards, Millán enjoyed organized labor's backing for the state's top spot inasmuch as it was the only governorship available to a union notable.

His labor credentials aside, Millán knew that investment was the key to raising the quality of life in this seafood- and farming-dominated state whose personal income ($5,800) fell far below the national average ($9,100). Yet honest businessmen looked askance at Sinaloa because the state-which forms part of the Chihuahua-Sinaloa-Durango "Golden Triangle" for drug activities-produces an abundance of heroin poppies and marijuana and was home to many of the nation's most notorious narco clans, including Carrillo Fuentes, Arellano Félix, Caro Quintero, Joaquín "El Chapo" Guzmán and Ismael "El Mayo" Zambada. Some members of these families still live in heavily fortified compounds, especially in the mountainous eastern part of the state.

Contributing to these Hobbesian conditions was a lack of teamwork-even hostility-among the military and the various federal, state, and local law-enforcement agencies. As a result, Millán appealed to President Ernesto Zedillo, Salinas' successor, to order army, navy and federal authorities to collaborate with state and local police forces. This sparked the creation of the Sinaloa Central Group, chaired by Millán, that met monthly, fostered cooperation and helped reduce the murder rate. The number of homicides, which had averaged 649 annually in the six years before Millán took office, dipped in 1999 (560) and 2000 (499) before rising again after Fox's inauguration.

The Policeman

As vexing as they found this bloodletting, Millán and Mexican business moguls understood that most of the killings involved drug cartels that were competing for territory, settling old scores with competitors or reaping vengeance on audacious judges. What investors feared even more than ak-47-wielding goons was the continued kidnapping of corporate executives and their family members-a crime in which Mexico is second only to Colombia in the Americas. ceos live in fear that they, their colleagues or family members will be grabbed for cash by predators who do not think twice before cutting off a captive's finger or ear to show their ruthlessness.

This realization prompted Millán to recruit Iván Ortega Colmenares, a 47-year-old ex-Venezuelan intelligence officer who studied industrial security at Florida International University and had attended specialized schools throughout Latin America, as well as at Ft. Bliss and other U.S. facilities. Millán gave Comandante Simón, as Ortega prefers to be called, a blank check to create a Special Anti-Kidnapping Unit, also known as the Fuerza de Respuesta Inmediata or FRI. Over the course of several months, the muscular hawk-eyed commander with a quarter-century experience under his belt assembled a crack team of eighty young men and women whose sole function was to prevent kidnappings and, failing that, to return the victim unharmed. fri operatives train in part by working out; they run twenty kilometers and swim a mile and a half each day. The squad includes twelve sharpshooters and other heavies, but most of its members are wizards in computers, electronics, engineering, voice profiling, polygraphs and other technical skills-some of which they have honed in classes with Israeli and American instructors. The force provides round-the-clock security for 180 top businessmen, who reimburse the state based on their ability to pay. Several dozen executives are on the waiting list.

During Millán's first year on the job, citizens reported 37 kidnappings. Since the FRI's deployment 22 months ago, the number has dropped from thirty in 2000 to 25 in 2001-with only a handful so far this year. Nationwide, Mexico-which suffered at least 360 kidnappings last year-has endured 331 in the first eight months of 2002. Meanwhile, Comandante Simón's team has rescued every one of the victims and recovered every peso of danegeld paid. He has done so, too, without either losing a single member of his force or activating his marksmen. Before the advent of the fri, residents often failed to disclose kidnappings, believing that the police were in cahoots with criminals. Instead, distraught families would negotiate privately with the wrongdoers. Sometimes the loved one showed up unharmed; sometimes the result was mutilation or death-and the loss of hundreds of thousands, even millions, of dollars.

Millán has upped the ante for those foolish enough to attempt kidnappings in Sinaloa. He persuaded the state legislature to double to fifty years the prison time for this felony. When local judges treat the bad guys with kid gloves out of fear or fecklessness, the hard-charging governor asks their judicial superiors to relieve them.

The populist Millán, who visits a different school every "Civic Monday" to meet with students, teachers and community leaders, derives particular satisfaction when he can reunite a missing child with its grieving family. After being held for five days, eleven year-old Rodolfo Rochín had only two desires: freedom and a helicopter ride. Ten FRI counter-kidnapping pros answered the first wish, Millán the second. Late last February, the governor, a wide-eyed Rodolfo, and several family members and friends took to the air. A crowd of well wishers and popping flash bulbs attended their landing.

Although he assembled the fri to grab investors' attention and dollars, Millán has been careful to demonstrate that the unit serves the meek as well as the mighty. In August 2001, a criminal band snatched the beloved sheriff of the poor community of Escuinapa and demanded $6,500 for his release. A gubernatorial advisor indicated that it would cost at least that sum to dispatch the fri to this remote area. It would be more economical, he reasoned, just to help the locals raise the ransom. Millán thought otherwise on the grounds that every Sinaloan, regardless of his financial standing, deserved protection. Within twelve days, Comandante Simón and his force had rescued the sheriff (whose entire wealth consisted of six head of cattle so scrawny that they, with a seventh in tow, could have come straight from Pharaoh's dream).

Cases like this explain why, during last year's Independence Day parade in the state capital of Culiacán, onlookers enthusiastically cheered a police force for the first time in the history of Sinaloa-perhaps in the whole history of Mexico. Needless to say, the hurrahs were directed toward the fri, whose members-although they live throughout the community-wear either ski-masks or tinted face shields to disguise their identities. These accolades irritated unpopular regular police officers, who belittle the high-tech special unit as "Nintendo cops" or "galactic warriors."

Such sour grapes notwithstanding, Comandante Simón, who disdains kidnappers as "the worst breed of cowards because they prey on children and other vulnerable members of society", has become a local folk hero. One rescued victim named him godfather of his child; grateful families have taken newspaper ads lauding the hard-charging Millán and the low-key fri chief; and primary-school teachers have reported their pupils saying "when I grow up I want to be like Comandante Simón." It is probably only a matter of time before he and his squad enter the lyrics of folk songs or are featured in a tv series. The bright lights are unlikely to lure Simón away from Sinaloa, however, in part because he has married a local woman and become a Mexican citizen.

The decline in kidnappings gives FRI professionals more time to upgrade their specialties and to spread the Sinaloa model. Comandante Simón and his crew, who have earned kudos from the federal attorney general's office, have provided training to law-enforcement agencies in a score of other Mexican states.

The Promoter

No one appreciates the tough-as-nails Venezuelan native more than Heriberto Félix Guerra, Millán's secretary of economic development, who is also vice president of the public-private Sinaloa Economic Development Council (co-desin). When requested, Ortega has heart-to-heart talks with prospective investors, including those from Japan and Korea who vividly remember the violence visited upon Sanyo, Mogami and Sharp executives in Tijuana in the state of Baja California in the mid- to late-1990s. Involving Comandante Simón when appropriate is also part of Secretary Félix's commitment to one-stop shopping for entrepreneurs. A former businessman, securities broker and chamber of commerce leader, the forty year-old Félix knows firsthand the frustrations of confronting sticky-fingered, come-back-tomorrow bureaucrats. That's why his mantra-and codesin's slogan-is "Todo En Un Solo Lugar" ("Everything in One Place").

Practically speaking, this means that a California resort mogul interested in building a luxury seaside hotel in, say, Rosario, can usually get answers to his questions and obtain all local, state and federal permits in the Government Palace in Culiacán, where all major federal agencies have offices. For most initiatives, Félix and his young staff can help the client complete the paperwork in eight hours. If complications arise, the secretary assigns a senior account executive to the investor's project. This troubleshooter, whose paycheck grows fatter with every success, will accompany the hotelier to Rosario, Mexico City or wherever there is red tape to slash. If obstacles remain, Félix himself will take charge and, as a last resort, enlist Millán to contact either a cabinet secretary or President Fox. Because the nation's chief executive belongs to the National Action Party, many pri governors have treated him with all the kindness of Cromwell ruling Ireland. Not so the savvy Millán. He has welcomed the president to Sinaloa six times. Good personal chemistry has engendered an effective working relationship-one that ensures that government big shots in Mexico City readily take the governor's phone calls.

Indeed, the power-point adept, tie-wearing Félix and the gregarious, open-collared Millán complement each other in winning converts to Sinaloa. The secretary crunches numbers, dispenses technical skinny and accelerates the acquisition of permits. For his part, the bon vivant Millán treats visitors to fist-sized shrimp, succulent steaks and delicate wines while regaling them with thrilling tales of his dealings with swag-bellied politicians and conniving union chiefs.

Eager to make the state more attractive, both men listen as much as they talk. Upon concluding one deal, Félix inquired of the new investor: "Now that all the papers are signed and we've emphasized positive things, please tell me what you find wrong with Sinaloa." Without a moment's hesitation, the client shot back, "Your airport is a museum piece." This response prompted Millán to lobby Mexico City for funds to modernize Culiacán's airport, now one of the most attractive in the country. A brand new bus terminal is a godsend for travelers seeking lower fares, and the capital's three major hospitals-one of which was the scene of the nation's first heart transplant-are undergoing improvements.

That Sinaloa is relatively far from major population centers accentuates Félix's and Millán's interest in transportation. Their offices overflow with maps showing how a few hundred miles of new highways could link the northern Sinaloan port of Topolobampo to both the country's Caribbean coast and the United States. Another projected highway arc, developed by Millán and Arizona Governor Jane D. Hull, runs from the state through the United States to Canada.

Neither Millán nor Félix courts industries that will pull up stakes the moment they can make a few more dollars offshore or in a neighboring state. Rather, they are determined to attract enterprises that will sink roots in Sinaloa and generate new and permanent jobs for Sinaloans. This excludes footloose assembly operations. "If you want to see Mexico's past just look at Baja California and Chihuahua", Félix told me. The handsome secretary with the fervor of a true believer added that

both states suffer soaring unemployment and crime because finicky maquiladora owners are shifting their operations to China or Central America to take advantage of sweat-shop wages. That's not for Sinaloa. Our objective is to lead the nation's economic advancement by 2010.

codesin thus focuses on seven sectors: food, tourism, textiles, light manufacturing, commerce and services, software and filmmaking.

Millán's round face lights up when he mentions Citrofrut. The governor phoned entrepreneur Guillermo Zambrano, a member of one of the nation's wealthiest families, who sought a site for a state-of-the-art fruit processing plant. Zambrano, who had narrowed his search to three other states, later said, "The only reason that I even visited Sinaloa was out of courtesy to the governor." He obviously liked what he saw, and Rosario-Millán's hometown-now has 200 residents employed in an ultramodern Citrofrut facility, the biggest in North America. Nearby, construction workers are building the Estrella de Mar, an upscale Spanish-style resort.

At a time when Asian and Caribbean competitors have put the squeeze on Mexico's textile industry, the Tex Ray Group has opened a new plant in Culiacán. Its "complete package" technology-that is, the capability of turning raw thread into finished goods under one roof-provides a comparative advantage vis-à-vis old-fashioned producers. And Charles Dudgeon, president of Thatcher Tubes, llc, which is headquartered in Woodstock, Illinois, opted for relatively parochial Sinaloa over Monterrey, the dynamic, cosmopolitan capital of Nuevo León state. In explaining his decision, he said:

Monterrey embodies the present in terms of having an infrastructure and well-trained workers, but the city is beginning to face a labor shortage; in contrast, Sinaloa represents the future because it has an abundant, well-educated, and stable labor force.

Dudgeon also gave high marks to Félix's team, saying that "their promises are not just words in a glossy brochure, they really come through."

Last May 30, Millán laid the cornerstone on the Forum Culiacán, which embraces 14 movie screens, dozens of restaurants, a deluxe hotel, night clubs, Sears and other major stores, and specialty shops operated by Nine West, Liza Minelli, Perry Ellis, Levi's, Dockers and Swatch. This mega-mall, the nation's newest, will make Sinaloa's capital the shopping mecca of northwest Mexico. Like Ortega's fri operatives, things seem to be working out.

Although vitally concerned about attracting new enterprises, Félix keeps in close touch with current corporate citizens. "How can the state assist you?", he asks. "Improved services? Better infrastructure? Job training?" Although several dozen corporations generate the lion's share of jobs and earnings, the codesin chief also remains attentive to small businesses. In particular, he encourages the large firms to purchase from smaller companies in the state. Millán expressed surprise when Félix balked at accompanying him on a trip to Los Angeles. "I can get more accomplished in Sinaloa-with grassroots businesses as well as with prospects-than I can in California", the secretary replied.

The strides made by Millán and his entourage have broad relevance for Mexico and other developing countries. First, the governor has articulated difficult but clear goals that address the fundamentals that citizens want from government-jobs, education, healthcare and personal safety. Second, he has assembled top aides who both share his vision and work well together, and he has given them a great deal of discretion and support to carry out their duties. Third, he has focused on meeting the needs of investors, who number among his most enthusiastic boosters. Fourth, he has built bridges-between labor and management, firms big and small, domestic and foreign companies, the executive branch and the state legislature, and himself and the nation's chief executive. Finally, he has labored tirelessly to gain the confidence of citizens, state employees and investors.

In the four years remaining in his term, Fox could benefit from the lessons emerging from Sinaloa. So could leaders of other developing areas. While every place has its own particular problems and needs, the combination of pragmatic if not angelic leadership, personal bravery, improvements in the judicial system, a capable, coherent team and market-based economics is a formula that will help any needy region. If only it could be franchised.