Institutions and Development in Mexico: Are Formal Economic Reforms Enough?

21 Pages Posted: 21 Aug 2008

Date Written: December 1, 2006

Abstract

This paper examines whether the current political arrangements framing the Mexican politics help in consolidating and advancing those economic reforms that have been implemented in Mexico since the 1982 severe economic crises. I will argue that these arrangements create impediments to the co-ordination required to sustain and advance those policy changes that are needed under the new economic model. Formal and informal institutional environments that do not provide for the adequate enforcement of political exchanges also generate high transaction costs. Politicians will have to design complex mechanisms to protect their rent allocation. Many political transactions will not be implemented, and those that may be so will tend to generate relatively inefficient public policies. The capability of the political system to enforce the new economic rules as well as property and other legal rights is also weak. As these factors play a key role for the allocative efficiency of markets and, consequently, for growth and development, the paper concludes that formal macroeconomic and structural reforms in economic sectors may not be enough.

Keywords: Legislative Coalitions, Property Rights, Institutions, Economic Reform, Presidential System, Mexican Politics.

JEL Classification: D23, D78, P16

Suggested Citation

Palma-Rangel, Manuel, Institutions and Development in Mexico: Are Formal Economic Reforms Enough? (December 1, 2006). Revista de Analisis Economico, Vol. 21, No. 2, 2006, Available at SSRN: https://ssrn.com/abstract=1241122

Manuel Palma-Rangel (Contact Author)

affiliation not provided to SSRN

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