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MEXICO CITY (Reuters) - Mexico's ambitions to become a top world economy are being held back by a corrupt public education system controlled by a powerful union boss known as "The Teacher" who politicians fear to cross.
One of the biggest exporters to the United States and home to the world's richest man, Carlos Slim, Mexico is grappling with alarming school dropout rates and some of the worst grades among industrialized nations, with pupils struggling to read and write even after years of instruction.
Often studying in crumbling schools in spite of increased spending on education, 15-year-old Mexicans were among the worst performers in a study of 65 countries published late last year by the Paris-based OECD group of leading economies.
"There's a general consensus in Mexico that the public education system is a catastrophe and that we are pawning off the country's future," said Ricardo Raphael, an expert in public education who has written widely about the crisis.
About half of Mexican teenagers between 15 and 19 neither attend school nor take jobs, according to the OECD, and thousands of teachers never show up for work, experts say. Only 45 percent of Mexicans finish secondary school, compared to about 75 percent in the United States.
Such reports stand in sharp contrast to predictions by that Mexico could soon become one the world's top 10 economies.
Mexicans point the finger of blame at the lifetime president of the National Teachers' Union, Elba Esther Gordillo, a wealthy 66-year-old who one prominent political analyst once called the "Darth Vader of Mexico."
For many Mexicans, Gordillo is a symbol of the problems Mexico has yet to resolve a decade after ending 71 years of one-party rule, when the world's No. 7 oil exporter was run via a system of patronage with little regard for the rule of law.
Known as La Maestra, a respectful term for a teacher in Mexico, Gordillo holds sway over a 1.2 million-member union and leverages the votes of teachers in classrooms extending from the U.S. border to the Guatemalan frontier to favor whichever political party benefits her fiefdom the most.
With union members, including her son-in-law, holding senior positions in the education ministry, the social security system and some state governments, her power is immense and she has resisted any attempts to modernize Mexican education.
"Mexican politicians cross her at their peril," said George W. Grayson, a Mexico expert at the College of William and Mary in Virginia. "Without the backing of Gordillo, (President Felipe) Calderon would not have won the last election."
Gordillo -- who declined repeated requests for an interview -- was born into poverty in southern Mexico and started working as a teacher at 15, following in her mother's footsteps.
Widowed at 18, Gordillo moved to Mexico City, befriended the union leader of the day and began her ascent through the organization's ranks. After Carlos Salinas de Gortari became president in 1988, teachers' protests broke out over wages, and he turned to Gordillo to bring order, naming her union boss.
But she quickly thwarted government efforts to decentralize education, give parents a bigger role and weaken the union.
Since then, schools in Mexico have languished near the bottom of the class in line-ups with international rivals.
In the OECD study, Mexico came in a lowly 46th place in reading, while in science it was 51st, well behind the cities surveyed in China, the country's big manufacturing rival.
While Mexican industry has come back strongly from 2009's recession, the average annual growth of 2 percent in the past decade is far behind that of regional peers Brazil and Chile.
This is not nearly enough to absorb the million or so new jobseekers coming onto the job market each year, analysts say.
In the meantime, the pugnacious Gordillo has set about turning the teachers' union into a lucrative empire.
Dubbed "Jimmy Hoffa in a dress" by some commentators, in reference to the late U.S. Teamsters union leader, she personally manages about $60 million a year that teachers pay in dues, and has accumulated a large fortune.
With mansions in Mexico City and California and a private jet, Gordillo presides over a system in which the union sells posts to aspiring teachers and skims off money from government funds destined for new computers and teachers' housing.
"The union's grand business is the enormous black market that is a type of parallel economy that moves billions of pesos every month," said David Calderon, an activist who heads a group pushing for changes in Mexican public education.
In the absence of an annual collective bargaining contract for teachers, Gordillo has the power to demand pay rises and a host of benefits for teachers from the government, including several thousand who collect paychecks but never teach.
That partly explains why Mexico's significant investment in public education -- about 5 percent of gross domestic product annually -- has not translated into better results.
"Without better quality education, Mexico will neither reduce inequality nor build a prosperous middle class. And it won't be able to compete with other emerging economies," said OECD secretary general Angel Gurria, himself a Mexican.
Additional reporting by Dave Graham, writing by Robin Emmott; editing by Anthony Boadle