Development strategy reconsidered: Mexico, 1960-94

Toru Yanagihara and Yoshiaki Hisamatsu

No 1889, Policy Research Working Paper Series from The World Bank

Abstract: Different ways of discussing development strategy often reflect different definitions of development. Analysts who emphasize income or production as indicators of development may focus on macroeconomics or sectors. Other analysts may focus on distribution and social aspects as development. Economists tend to see development strategy from the normative, technocratic perspective of welfare economics. Political scientists may see development as a process of political interaction between different interests. Using Mexico as a case, the authors examine macroeconomic conditions and policies (based on flow of funds tables) and estimates of resource transfers between sectors and regions, to relate them to development strategies. They find that: 1) Macroeconomic conditions and policies have exerted a strong impact on resource transfers between the productive sector and the financial and fiscal sectors. 2) Because of the strong impact of macroeconomic conditions and policies, resource transfers between productive sectors were not necessarily evident for either financial or fiscal transfers. But combined transfers from nonagricultural states to agricultural states were significant in three out of four periods examined. 3) The government more effectively controls fiscal transfers because it is directly involved in decisionmaking about public investment and federal participation. Figures on fiscal transfers suggest that the government favored agricultural states in the quarter century studies. 4) Fiscal transfers dominated financial transfers--hence the general transfer from nonagricultural states to agricultural states. The Mexican government maintained a strong interventionist stance toward the rural and agricultural sector even as it espoused reducing the government's role in economic management. 5) During the era of shared development, the government favored less productive agricultural states over highly productive agricultural states. As agrarian reform was reformed, this favoritism diminished and eventually disappeared. 6) The study results reflect the Mexican government's political inclination to favor agricultural or rural states in coping with macroeconomic turmoil. In terms of development strategy, the federal government may have maintained that preference in securing resource flows, but that focus on the subsistence sector seems to have diminished recently.

Keywords: Health Economics&Finance; Environmental Economics&Policies; Payment Systems&Infrastructure; Economic Theory&Research; Decentralization; Economic Theory&Research; Poverty Assessment; Environmental Economics&Policies; Health Economics&Finance; Achieving Shared Growth (search for similar items in EconPapers)
Date: 1998-03-31
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