Mexico:( - uky.edu

Mexico:  

Industrializa3on,  economy,  neoliberalism  

Background  factor:  Income  inequality  

No  income  for  Mexicans  =  no  ‘effec3ve  demand’,  no  economic  s3mulus  

Current  Gini  Coefficient  =  .45  (aJer  taxes,  transfers)  

Everything  else,  all  other  strategies,  constrained  by  income  inequality  

Stimulate economic activity: methods I.  cheapen labor? How?

depress real wages:¿What is a 'real' wage?? II.  cheap food? how? (agrarian question)

i.   foodimport ii.   capitalize food production (irrigation/

mechanization, green revolution) iii.   squeeze peasants

III. gov’t subsidized housing / cheap housing IV.   depress nominal wages

Paths of industrialization

Newly industrializing countries (e.g. Mexico, S. Korea, Taiwan, Brazil) typically combine the following development strategies:

  primary commodity industrialization (PCI)

(Resource rich countries Resource poor countries)     

b. Primary ISI Primary EOI      

c. Secondary ISI Secondary EOI  

                                                       South  Korea  d. market broadening (new products) and

deepening (backwards/forwards linkages creation)  

Mexico’s historic path: Primary CI >>Primary ISI>>Secondary ISI>>Secondary EOI    

ISI= Import Substitution Industrialization:"replacement of imported goods with nationally produced goods

EOI= Export-oriented industrialization:"production of goods for export markets  

"a. high tariffs b. state subsidies to heavy industry c. tendency (consumer politics) to overvalued currency  

"a. low tariffs b. state subsidies to export industries c. tendency (producer politics) to undervalued currency"  

ISI reaches point of exhaustion Economic problem = political problem

i. anti-agricultural bias: agriculture subsidizes industrial growth, decline in agriculture results for both subsistence and agro-export sectors

ii. incorporation of ‘elite’ workers into development coalition fuels disarticulated nature of accumulation

a. economic inequality ≠ back to disarticulated accumulation

b. political inequality, lack of political channels through which to challenge economic marginalization

iii. lack of market widening dooms ISI: too small a base iv. tariffs allow ISI, but fail to stimulate competitiveness

lack of market widening dooms ISI: too small a base  Case  study:  San  Mateo  Atenco  i.  US  closes  na3onal  shoe  industry  ii.  Mexico  produces  lots  of  great,  high-­‐quality  leather  shoes  iii.  US  imports  shoes  from  Brazil  instead!  iv.  Doomed  by  currency  overvalua3on  and  lack  of  

government  aVen3on  to  sector  

incorporation of ‘elite’ workers into development coalition fuels disarticulated nature of accumulation