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Competitiveness and Growth of the Mexican Economy

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  • Daniel Chiquiar
  • Manuel Ramos Francia

Abstract

We address the role that deep, structural factors may have as determinants of Mexico’s economic growth. We argue that Mexico’s poor growth performance appears to be associated not only with shorter-run events such as the "lost decade" of the eighties, but also with supply-side features of the economy that have been present for at least four decades. Mexico’s low competitiveness and poor growth potential seem to reflect an institutional framework that tends to support rigid, non-competitive market structures, and incentives that promote the allocation of resources towards unproductive rent-seeking activities relatively more than into investment, production, productivity, and adoption of superior technologies. We present examples of input markets where we believe these issues are central. We conclude that solving this situation requires microeconomic policies that lead to fundamental changes in the incentive structure of the economy.

Suggested Citation

  • Daniel Chiquiar & Manuel Ramos Francia, 2009. "Competitiveness and Growth of the Mexican Economy," Working Papers 2009-11, Banco de México.
  • Handle: RePEc:bdm:wpaper:2009-11
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    Cited by:

    1. Gordon H. Hanson, 2010. "Why Isn't Mexico Rich?," Journal of Economic Literature, American Economic Association, vol. 48(4), pages 987-1004, December.
    2. Arias-Vazquez, Francisco Javier & Azuara, Oliver & Bernal, Pedro & Heckman, James J. & Villarreal, Cajeme, 2010. "Policies to Promote Growth and Economic Efficiency in Mexico," IZA Discussion Papers 4740, Institute for the Study of Labor (IZA).
    3. Jorge Alvarez & Fabian Valencia, 2015. "Made in Mexico; Energy Reform and Manufacturing Growth," IMF Working Papers 15/45, International Monetary Fund.
    4. Alvarez, Jorge & Valencia, Fabian, 2016. "Made in Mexico: Energy reform and manufacturing growth," Energy Economics, Elsevier, vol. 55(C), pages 253-265.
    5. World Bank, 2013. "Toward a More Competitive Business Environment," World Bank Other Operational Studies 16581, The World Bank.

    More about this item

    Keywords

    Competitiveness and growth; productivity; efficiency; comparative advantage.;

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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