The Manufacturing Sector in Argentina, Brazil, and Mexico

Transformations and Challenges in the Industrial Core of Latin America

Juan Eduardo Santarcángelo

• Publisher: Palgrave Macmillan
• Year: 2019
• Print ISBN: 9783030047047
• eBook ISBN: 9783030047054
• Topic: Business
• Subtopic: International Business
• Index: Business

Using a heterodox perspective, this book discusses the real possibilities of Argentina, Brazil and Mexico ever achieving economic development through industrialization. Through their discussion of the three most industrialized countries of Latin America, the contributors compare trajectories and critically analyze the transformations, challenges and development prospects of the sector at the beginning of the 21^st Century. Focusing on the historical evolution of each country's industrial sector, as well as their productivity, structural transformation, and degree of external dependence and international integration, this book will appeal to those researching the political economy, economic history, industrial organization and economic development in Latin America.

© The Author(s) 2019

Juan Eduardo Santarcángelo (ed.)The Manufacturing Sector in Argentina, Brazil, and MexicoPalgrave Studies in Latin American Heterodox Economicshttps://doi.org/10.1007/978-3-030-04705-4_4

Begin Abstract

The Manufacturing Sector in Mexico During the Neoliberal Period

Abelardo Mariña Flores¹ and Sergio Cámara Izquierdo¹

(1)

Universidad Autónoma Metropolitana-Azcapotzalco, Mexico City, Mexico

Abelardo Mariña Flores (Corresponding author)

Sergio Cámara Izquierdo

Email: [email protected]

End Abstract

1 Introduction

The Mexican economy underwent an expansive long wave of rapid capital accumulation from the mid-1930s until the beginning of the 1980s. The structural foundation of this long wave was the elevated levels of profitability that emerged from the structural transformations of the world and Mexican economy that took place during the interwar period and that were reinforced during World War II (WWII). This favorable economic scenario was complemented by the social and institutional context originated from the Mexican Revolution and its aftermath, which gave rise to a Mexican state strongly committed to the development of the economy and to the promotion of productive investment. A boisterous public investment in industrial productive plant was crucial for the initiation of the process of import substitution industrialization (ISI) prompted by the collapse of global trade and capital flows during the Great Depression and WWII. A continued public investment effort and a Keynesian-inspired economic policy were essential for the continuation in the postwar era of the ISI regime of accumulation, heavily oriented toward the domestic market (Mariña Flores and Cámara Izquierdo 2016, 168–170).

An examination of the main characteristics of the expansive long wave is enlightening, especially when compared with the later performance of the Mexican economy during the last three and a half decades. The rate of growth of GDP averaged a robust 6.2% between 1933 and 1981, which is explained for the 1940–1980 subperiod by a remarkable productivity growth and by a sound process of job creation, both increasing at a 3.1% average annual growth rate.¹ Both phenomena are related to a very dynamic process of capital accumulation, as shown in a growing investment share in the GDP along the whole period 1933–1981: from an average of 10% in the 1940s and 17.5% in the 1950s and 1960s to 26.8% in the 1970s. Another vital feature of the long wave was the expansion of real wages since the end of the 1940s to mid-1970s: the real minimum and average manufacturing wages grew at an average annual rate of 5% and 3%, respectively. This increase is closely related to the role of the domestic market as the motor of accumulation during the 1950s, 1960s, and, to a lesser extent, 1970s. As shown in Fig. 1, domestic production was increasingly oriented toward the domestic market and covered an increasing proportion of the domestic final demand during the 1950s and 1960s, and the elevated levels around 90% of both proportions were maintained during the 1970s.

Fig. 1

Domestic market as motor of accumulation, Mexico, 1950–2016. Source: System of National Accounts of Mexico, base years 2013, 2008, 1993, 1980, 1970, 1960, 1950, Instituto Nacional de Estadística y Geografía (INEGI)

The strong process of capital accumulation came consistently with a tendency of the rate of profit to fall, which manifested in Mexico since the second half of the 1960s and endured until the mid-1980s. The first symptoms of the profitability crisis were the weakening of private productive investment and inflationary pressures since 1969, which translated into devaluation pressures a few years later. This scenario heavily contrasts with the low inflation rates and the stability in the exchange rate, under a fixed regime from 1956 to 1975, of the previous period. The stabilization pact with the International Monetary Fund (IMF), after the 1976–1977 balance of payments crisis, signaled the shape of the imminent structural transformation of the Mexican economy along with the international patterns: wage restraint, external ope...

Table of contents

• Cover
• Front Matter
• Introduction
• The Manufacturing Sector in Argentina at the Beginning of the Twenty-First Century
• Structural Change and the Manufacturing Sector in the Brazilian Economy: 2000–2014
• The Manufacturing Sector in Mexico During the Neoliberal Period
• The Evolution and Challenges of Latin American Industrial Development in the Twenty-First Century: An Analysis from Argentina, Brazil, and Mexico
• Back Matter