Why Have Economic Reforms in Mexico Not Generated Growth?

34 Pages Posted: 6 Dec 2010

See all articles by Timothy J. Kehoe

Timothy J. Kehoe

University of Minnesota - Twin Cities - Department of Economics; National Bureau of Economic Research (NBER)

Kim J. Ruhl

New York University (NYU), Leonard N. Stern School of Business - Department of Economics

Date Written: December 2010

Abstract

Following its opening to trade and foreign investment in the mid-1980s, Mexico's economic growth has been modest at best, particularly in comparison with that of China. Comparing these countries and reviewing the literature, we conclude that the relation between openness and growth is not a simple one. Using standard trade theory, we find that Mexico has gained from trade, and by some measures, more so than China. We sketch out a theory in which developing countries can grow faster than the United States by reforming. As a country becomes richer, this sort of catch-up becomes more difficult. Absent continuing reforms, Chinese growth is likely to slow down sharply, perhaps leaving China at a level less than Mexico's real GDP per working-age person.

Suggested Citation

Kehoe, Timothy J. and Ruhl, Kim Joseph, Why Have Economic Reforms in Mexico Not Generated Growth? (December 2010). NBER Working Paper No. w16580, Available at SSRN: https://ssrn.com/abstract=1719940

Timothy J. Kehoe (Contact Author)

University of Minnesota - Twin Cities - Department of Economics ( email )

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1169 Management & Economics
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National Bureau of Economic Research (NBER)

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Kim Joseph Ruhl

New York University (NYU), Leonard N. Stern School of Business - Department of Economics ( email )

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New York, NY NY 10012
United States

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