Growth and employment in Mexico: A quantitative analysis of policies

B. Fischer, E. Gerken and U. Hiemenz

No 95, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: Mexico has sustained unusual rates of real income growth (6.4 % of average annual GDP growth between 19 50 and 1970) by following an economic policy giving first priority to manufacturing industries. Import substitution has been the dominating trade strategy since the late 1940s with only cautious steps to a more export oriented strategy since the mid-1960s. Mexico has not been spared the well known problems of regional and sectoral imbalances, a skewed personal income distribution and unemployment accompanying the industrialization of other developing countries. Beginning with the presidentship of Diaz Ordaz (1966-70) the attenuation of imbalances and inequities is proclaimed as a specific policy goal in plan documents, while employment creation is added to the list in the Echeverrîa administration. Although based on another stratum of the Mexican political economy the stepwise execution of a massive land reform has obvious complementary effects to the industrial policy. The agricultural sector absorbs much of the fast growing labor force which cannot be employed in the more capital-intensive industries under socially acceptable conditions. The land reform allows for a minimum wage and a working conditions policy in urban regions without increasing the urban unemployment to a level where it would disrupt the political system. Land reform and minimum wages help to keep political stability despite the social strains created by rapid industrialization as well as population growth.

Date: 1979
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:95

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