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Why Have Economic Reforms in Mexico Not Generated Growth?

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  • Timothy J. Kehoe
  • Kim J. Ruhl

Abstract

Following its opening to trade and foreign investment in the mid-1980s, Mexico’s economic growth has been modest at best, particularly in comparison with that of China. Comparing these countries and reviewing the literature, we conclude that the relation between openness and growth is not a simple one. Using standard trade theory, we find that Mexico has gained from trade, and by some measures, more so than China. We sketch out a theory in which developing countries can grow faster than the United States by reforming. As a country becomes richer, this sort of catch-up becomes more difficult. Absent continuing reforms, Chinese growth is likely to slow down sharply, perhaps leaving China at a level less than Mexico’s real GDP per working-age person.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16580.

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Date of creation: Dec 2010
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Publication status: published as Timothy J. Kehoe & Kim J. Ruhl, 2010. "Why Have Economic Reforms in Mexico Not Generated Growth?," Journal of Economic Literature, American Economic Association, vol. 48(4), pages 1005-27, December.
Handle: RePEc:nbr:nberwo:16580

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Citations

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Cited by:
  1. Robert Blecker, 2014. "Structural Change, the Real Exchange Rate, and the Balance of Payments in Mexico, 1960-2012," Working Papers, American University, Department of Economics 2014-01, American University, Department of Economics.
  2. Susanto Basu & Luigi Pascali & Fabio Schiantarelli & Luis Serven, 2012. "Productivity and the welfare of nations," Economics Working Papers, Department of Economics and Business, Universitat Pompeu Fabra 1312, Department of Economics and Business, Universitat Pompeu Fabra.
  3. Hanushek, Eric A. & Woessmann, Ludger, 2012. "Schooling, educational achievement, and the Latin American growth puzzle," Journal of Development Economics, Elsevier, Elsevier, vol. 99(2), pages 497-512.
  4. Blecker, Robert A. & Ibarra, Carlos A., 2013. "Trade liberalization and the balance of payments constraint with intermediate imports: The case of Mexico revisited," Structural Change and Economic Dynamics, Elsevier, Elsevier, vol. 25(C), pages 33-47.
  5. Barry Eichengreen & Donghyun Park & Kwanho Shin, 2011. "When Fast Growing Economies Slow Down: International Evidence and Implications for China," NBER Working Papers 16919, National Bureau of Economic Research, Inc.
  6. Foellmi, Reto & Oechslin, Manuel, 2012. "Globalization and Productivity in the Developing World," Economics Working Paper Series 1203, University of St. Gallen, School of Economics and Political Science.
  7. Timothy J. Kehoe & Felipe Meza, 2011. "Catch-up growth followed by stagnation: Mexico, 1950–2010," Working Papers, Federal Reserve Bank of Minneapolis 693, Federal Reserve Bank of Minneapolis.
  8. Syvertsen, Jennifer L. & Robertson, Angela M. & Rolón, María Luisa & Palinkas, Lawrence A. & Martinez, Gustavo & Rangel, M. Gudelia & Strathdee, Steffanie A., 2013. "“Eyes that don't see, heart that doesn't feel”: Coping with sex work in intimate relationships and its implications for HIV/STI prevention," Social Science & Medicine, Elsevier, Elsevier, vol. 87(C), pages 1-8.
  9. Timothy Kehoe & Felipe Meza, 2011. "Catch-up Growth Followed by Stagnation: Mexico 1950–2008," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 48(2), pages 227–268.
  10. Ariel Burstein & Javier Cravino, 2012. "Measured Aggregate Gains from International Trade," NBER Working Papers 17767, National Bureau of Economic Research, Inc.
  11. Colantone, Italo & Crinò, Rosario, 2014. "New imported inputs, new domestic products," Journal of International Economics, Elsevier, Elsevier, vol. 92(1), pages 147-165.

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