Policies for Industrial Learning in China and Mexico: Neo-developmental vs. Neo-liberal approaches

Mehdi Shafaeddin () and Kevin Gallaher

MPRA Paper from University Library of Munich, Germany

Abstract: Abstract Previous work has shown that the results of both China and Mexico’s export-led market reforms over the past quarter century have been strikingly different. In contrast to China, Mexico has not managed to increase the value added of its exports of manufactured goods and has subsequently had a difficult time competing with China in world markets. Building on this previous work, in this paper we conduct a comparative analysis of the role of government policies in industrial learning and the development of capabilities of indigenous firms in Mexico and China in order to shed light on why China is so outperforming Mexico. We find that Mexico and China have had starkly different approaches to economic reform in this area. Mexico’s approach to reform has been a “neo-liberal” one, whereas China’s could be described as “neo-developmental.” Mexico’s hands-off approach to learning has resulted in a lack of development of endogenous capacity of domestic firms, little transfer of technology, negligible progress in the upgrading of industrial production, and little increase in value added of exports. By contrast, China has deployed a hands-on approach of targeting and nurturing domestic firms through a gradual and trial and error led set of government policies.

Keywords: International trade; development; competitiveness; value added; government policy; assembly operations (search for similar items in EconPapers)
JEL-codes: F10 I0 I00 L52 L60 L63 N65 O14 O20 O25 O30 O31 O32 O34 O38 P52 (search for similar items in EconPapers)
Date: 2008-09
New Economics Papers: this item is included in nep-cna, nep-dev, nep-pke and nep-tra
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:11041

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