Sluggish capital accumulation with a rising profit share: four hypotheses for the Mexican economy

Robert A. Blecker and Carlos A. Ibarra

Chapter 13 in Economic Development, Economic Growth and Income Distribution, 2025, pp 249-282 from Edward Elgar Publishing

Abstract: The Mexican economy encountered two major difficulties in the first two decades of the twenty-first century: chronically low rates of economic expansion and a substantial decrease in the labor share of income. While traditional explanations point to supply-side limitations such as low productivity as the cause of slow growth, a different view in terms of demand-side influences, specifically fiscal and monetary policies and trade liberalization, is offered here. Drawing on classical Marxian and post-Keynesian growth theories, four factors are highlighted: (1) a higher profit share does not necessarily lead to a higher profit rate due to increased capital intensity; (2) foreign profit rates may increase simultaneously, preventing relative gains in domestic profitability; (3) stagnant real wages can dampen domestic demand; and (4) external markets may not provide sufficient demand stimulus, even if profit margins rise. The analysis suggests that policies which stimulate domestic demand, such as increased access to credit, higher levels of public investment, and moderate wage growth aligned with productivity, coupled with efforts to relieve external constraints, rather than further increases in the profit share, are essential for socially acceptable accelerating economic growth.

Keywords: Slow capital accumulation; Profit share; Income distribution; Mexican economy; Economic growth (search for similar items in EconPapers)
Date: 2025
ISBN: 9781803929903
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.elgaronline.com/doi/10.4337/9781803929910.00021 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:elg:eechap:21886_13

Ordering information: This item can be ordered from
http://www.e-elgar.com

Access Statistics for this chapter

More chapters in Chapters from Edward Elgar Publishing
Bibliographic data for series maintained by Jack Sweeney ().