Manufacturing, Industry and Growth in Mexico

Abstract

The Mexican economy has undergone an important transformation that started at the end of the 1980s. There is a greater weight of private investment and some companies are making major investments in certain manufacturing activities. The composition of foreign trade now rests mostly on manufacturing. Multinational companies, which have acquired assets in the country or have made new investments, are mainly interested in exports. However, the growth of manufactured exports has occurred without a sustained real gross domestic product (GDP) growth, let alone GDP per capita. There are no signs of an increase in technical development and there is evidence of slower growth in equipment, machines, and tools used to manufacture the goods being exported. Based on Celso Furtado’s analysis, it is possible to argue that what happened in Mexico is a breakthrough in the growth of manufacturing exports, a growth that creates neither conditions for industrial development nor positive changes in the composition of employment. It has created an export platform concentrated in small group activities, mostly due to the arrival of subsidiaries of foreign firms in the country. Industry is not the engine of sustained growth and even less an expansion of productive activity that encourages the emergence of new branches and the multiplication of exchanges among the various sectors of the economy. One witnesses weak growth and a tendency toward stagnation.