Add references and ideas about the causes of low economic growth in Mexico.
I would suggest this summary of Mexico’s low economic growth:
“…Mexico's government income base is narrow, which is reflected by the fact that almost 60% of the workforce is not registered in the tax payment system. High levels of income inequality and informal economic activity have persisted for many years…”
“…Mexico has struggled for three decades to raise trend growth rates. Despite a series of market-opening reforms, including the North American Free Trade Agreement, Mexico's real GDP growth has fallen behind that of other similar developing nations, both in Asia and in Latin America. As a result, GDP per capita and other improvements in living standards have stagnated.
Mexico has a serious productivity challenge that can be traced to what is often called the “two Mexico's"—a highly productive modern economy and a low-productivity traditional economy. The two Mexico's are moving in opposite directions: while the modern sector flourishes, competes globally, and raises productivity rapidly, in traditional Mexico (with very small, often informal enterprises), productivity is plunging.
- Productivity has grown 5.8% a year in modern firms but has fallen 6.5% a year in traditional firms
- Employees in traditional bakeries are 1/50th as productive as those in largest modern companies
- Manufacturing in Mexico is 24% as productive as in the USA, even though top plants exceed the US average
The rapid expansion of the Mexican labour force due to population growth has 72 percent of overall economic growth since 1990 – this is now coming to an end.
Since 1981, GDP growth in Mexico has averaged 2.3% a year. In 2012, the output of the average Mexican worker was about $17.90 per hour in purchasing power parity, still below the $18.30 per hour of 1981. Mexican GDP per capita, which was 12 times China's in 1980, is now only 25 percent higher, and, at current growth rates, China could surpass Mexico by 2018…”
Link: https://www.tutor2u.net/economics/reference/mexico-economic-growth-and-development
´Thanks for your comments Paul! I expect that other scholars put more information to increase the knowledge about this importan topic in Mexico.
My best wishes!
Here's few studies that I've found relevant.
- Iftekhar
https://gps.ucsd.edu/_files/faculty/hanson/hanson_publication_it_mexico.pdf
https://www.minneapolisfed.org/research/sr/sr453.pdf
https://www.econstor.eu/bitstream/10419/116074/1/ERSA2003_264.pdf
http://www.ncpa.org/pub/ba605
http://www.scielo.org.mx/scielo.php?script=sci_arttext&pid=S0187-73722000000200004
Dear Isaac: For years academics have tried to answer this question and recently they identified that the weak link is the institutional network, and I did some research which you can see here in Research Gate (Application of a dualistic model to Mexico, originally my Doctoral Thesis in Economics at Univ. of Barcelona, 2012) in which I twisted famed Mankiw-Romer-Weil equation and instead of the variable Rate of Human Resources, I introduced some variables that reflect the institutional set, in order to explain growth divergence as the economic face of Dualism, and the R square is 98 %, something that Acemoglu and Robinson in Why Nations Fall, also propose; my mail is [email protected], you can please write me there for more details,
Thanks a lot for your question and this opportunity to initiate exchanges
Truly
Francisco Javier Meléndez Hernández
Thanks for the information Francisco! Is your thesis available to download in Researchgate? Sounds really good!
The key factor to promote economic growth in Mexico is public investment.