Premature de-industrialisation: theory, evidence and policy recommendations in the Mexican case

The main consequences of premature de-industrialisation are a slowdown in the rate of economic growth and the deferral of economic development. Despite having adopted a 'successful' export-led growth strategy since the early 1980s, these two phenomena have characterised the Mexican economy during the past three decades. In this article I investigate whether premature de-industrialisation has been a major contributor to Mexico's economic stagnation and attempt to identify which factors have been driving it. The results confirm the hypothesis of premature de-industrialisation and suggest that the evolution of income, capital accumulation, labour manufacturing productivity, trade openness and the exchange rate provide an explanation for this process. I also suggest a set of alternative policy measures aimed at returning the Mexican economy to the path of growth and development.