Marx-Biased Technical Change and International Profit-Rate Convergence: The Case of Mexican Manufacturing

Carlos A. Ibarra

Review of Radical Political Economics, 2025, vol. 57, issue 2, 221-243

Abstract: The article studies the fall in the output/capital (OC) ratio in Mexican manufacturing, contrasting the hypotheses of high labor costs versus convergence toward the United States as drivers of Marx-biased technical change. While econometric estimations reject the labor-cost hypothesis—as do the evidence from wage-profit curves—they support the convergence one, showing in addition that convergence increased with the degree of US-Mexican industrial integration. Downward OC convergence, moreover, led to downward convergence in profit rates. Convergence aside, capital accumulation itself pushed the OC ratio down, confirming a tendency of accumulation to depress the profit rate. The estimations—for the change in the profit rate and the OC ratio—rely on a comprehensive annual panel of 17 Mexican manufacturing industries over the period 1992–2019. JEL Classification: C23, F15, F63, O14, O33

Keywords: output/capital ratio; Marx-biased technical change; wage-profit curves; profit-rate convergence; capital-productivity convergence (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:sae:reorpe:v:57:y:2025:i:2:p:221-243

DOI: 10.1177/04866134241283502

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