Economic Reform, Energy, and Development: The Case of Mexican Manufacturing

Given increasing concern over global climate change and national security there is a burgeoning interest in examining the relationship between economic growth and energy use in developed and developing countries. More specifically, delinking energy use per unit of gross domestic product (GDP) has fast come to be seen as in the interests of national economies and the world as a whole. Recent attention has been paid to the dramatic decreases in the energy intensity of the Chinese economy, which fell by 55 percent between 1975 and 1995 (Sinton and Fridley, 2000). Do other developing economies follow similar trajectories? This paper examines the energy intensity of the Mexican economy for the period 1988 to 1998. Although the long-term trend in Mexican energy intensity is rising, the energy intensity of the Mexican economy began to decline in 1988. This paper delineates the factors that have contributed to these reductions. Diminishing Mexican energy use per unit of GDP has been driven by significant decreases in industrial energy intensity. We show that these changes are due to changes in the composition of Mexican industrial structure, and technological change.