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

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  • Shafaeddin, Mehdi
  • Gallaher, Kevin

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.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 11041.

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Date of creation: Sep 2008
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Handle: RePEc:pra:mprapa:11041

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Keywords: International trade; development; competitiveness; value added; government policy; assembly operations;

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  1. van Elkan, Rachel, 1996. "Catching up and slowing down: Learning and growth patterns in an open economy," Journal of International Economics, Elsevier, vol. 41(1-2), pages 95-111, August.
  2. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  3. Manuel R. AGOSIN & Ricardo MAYER, 2000. "Foreign Investment In Developing Countries, Does It Crowd In Domestic Investment?," UNCTAD Discussion Papers 146, United Nations Conference on Trade and Development.
  4. Yun-Chung Chen, 2008. "Why Do Multinational Corporations Locate Their Advanced R&D Centres in Beijing?," Journal of Development Studies, Taylor & Francis Journals, vol. 44(5), pages 622-644.
  5. Bruton, H.J., 1998. "A Reconsideration of Import Substitution," Center for Development Economics 156, Department of Economics, Williams College.
  6. Moore, Robert E., 1997. "Learning-by-Doing and trade policy in a developing economy," MPRA Paper 10172, University Library of Munich, Germany.
  7. Shafaeddin, Mehdi & Pizarro, Juan, 2007. "From Export Promotion To Import Substitution; Comparative Experience of China and Mexico," MPRA Paper 6650, University Library of Munich, Germany, revised Oct 2007.
  8. Gallagher, Kevin P. & Moreno-Brid, Juan Carlos & Porzecanski, Roberto, 2008. "The Dynamism of Mexican Exports: Lost in (Chinese) Translation?," World Development, Elsevier, vol. 36(8), pages 1365-1380, August.
  9. Bell, Martin & Ross-Larson, Bruce & Westphal, Larry E., 1984. "Assessing the performance of infant industries," Journal of Development Economics, Elsevier, vol. 16(1-2), pages 101-128.
  10. Henry J. Bruton, 1998. "A Reconsideration of Import Substitution," Journal of Economic Literature, American Economic Association, vol. 36(2), pages 903-936, June.
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