Country tight lack of credit, informality and monopolies
Palmira González, El Norte
Palmira González, El Norte
Monterrey, Mexico (December 21, 2010) .- Mexico has not reported higher rates of economic growth by poor provision of credit, the persistence of informal, control of input markets by elites, inefficiency public education and vulnerability to foreign competition, argues professor at the University of California at San Diego, Gordon Hanson.
scholarly publication in its "Why Mexico is not rich?" Hanson explains that although in the past 30 years the country has reformed its economy to have an independent central bank and more developed financial markets, signed free trade and privatized a thousand companies had the lowest growth rate in Latin America, except for Venezuela.
Between 1985 and 2008 Mexico experienced an average annual growth of GDP per capita of 1.1 percent, while that of Chile grew 4.2 percent in the same period.
Between 2001 and 2008, Mexico grew at an annual rate of 1.3 percent, while Peru to 4.4 percent. In this same period, Bulgaria grew at a rate of 6.2 percent, the Czech Republic to 4 percent, Poland and Romania 4.2 percent to 6.8 percent.
"The explanations for the lagging status of Mexico ... proposed that a combination of poorly functioning credit markets, distortions in the supply of inputs that are not exchanged or perverse incentives for informality create resistance to the growth of productivity."
Hanson notes, for example, that the lack of credit to businesses has prevented further productivity growth.
"The provision of credit is central to the economic development process. Without mechanisms to move savings to debtors providers, a country is poorly qualified to take advantage of productive investment opportunities. Mexico stands to channel credit low firms or households. "
Between 1991 and 2000, credit to the private sector in Malaysia was equivalent to 163 percent of its GDP, while Mexico was only 25 percent.
In that same period, loans to companies in Brazil accounted for 56 percent of its GDP and 32 percent in Colombia.
The author criticizes the way that privatized companies such as Telmex, as the government failed to prevent the formation of monopolies, and also that there are no policies that encourage out of informality.
explains that in 2004, 36 percent of manufacturing employment in Mexico was in establishments with fewer than 50 workers and 22 percent in firms with fewer than 10 employees.
91 per cent of the plants with fewer than 10 employees have lower productivity than average for your industry, and most of these enterprises are informal. Hanson
contrasts that since 2000, the price per kilowatt hour in Mexico is 1.1 to 1.7 times the price in U.S. oil dependence, low labor productivity and higher wages for workers of electricity.
"If the generation of electricity to operate with the same labor productivity in Chile, Mexico would have 62 percent fewer workers in this sector."
Thus, says Hanson, Mexico's growth has been meager, despite having been successful in lowering inflation, maintaining fiscal discipline, reduce debt and increase its exports as a percentage of GDP.
"Given the force of reform, it is difficult not to see that Mexico has had poor results."
scholarly publication in its "Why Mexico is not rich?" Hanson explains that although in the past 30 years the country has reformed its economy to have an independent central bank and more developed financial markets, signed free trade and privatized a thousand companies had the lowest growth rate in Latin America, except for Venezuela.
Between 1985 and 2008 Mexico experienced an average annual growth of GDP per capita of 1.1 percent, while that of Chile grew 4.2 percent in the same period.
Between 2001 and 2008, Mexico grew at an annual rate of 1.3 percent, while Peru to 4.4 percent. In this same period, Bulgaria grew at a rate of 6.2 percent, the Czech Republic to 4 percent, Poland and Romania 4.2 percent to 6.8 percent.
"The explanations for the lagging status of Mexico ... proposed that a combination of poorly functioning credit markets, distortions in the supply of inputs that are not exchanged or perverse incentives for informality create resistance to the growth of productivity."
Hanson notes, for example, that the lack of credit to businesses has prevented further productivity growth.
"The provision of credit is central to the economic development process. Without mechanisms to move savings to debtors providers, a country is poorly qualified to take advantage of productive investment opportunities. Mexico stands to channel credit low firms or households. "
Between 1991 and 2000, credit to the private sector in Malaysia was equivalent to 163 percent of its GDP, while Mexico was only 25 percent.
In that same period, loans to companies in Brazil accounted for 56 percent of its GDP and 32 percent in Colombia.
The author criticizes the way that privatized companies such as Telmex, as the government failed to prevent the formation of monopolies, and also that there are no policies that encourage out of informality.
explains that in 2004, 36 percent of manufacturing employment in Mexico was in establishments with fewer than 50 workers and 22 percent in firms with fewer than 10 employees.
91 per cent of the plants with fewer than 10 employees have lower productivity than average for your industry, and most of these enterprises are informal. Hanson
contrasts that since 2000, the price per kilowatt hour in Mexico is 1.1 to 1.7 times the price in U.S. oil dependence, low labor productivity and higher wages for workers of electricity.
"If the generation of electricity to operate with the same labor productivity in Chile, Mexico would have 62 percent fewer workers in this sector."
Thus, says Hanson, Mexico's growth has been meager, despite having been successful in lowering inflation, maintaining fiscal discipline, reduce debt and increase its exports as a percentage of GDP.
"Given the force of reform, it is difficult not to see that Mexico has had poor results."
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We need structural reforms. The tax reform that favors productive investment. The labor reform to make more flexible the labor market. Also an energy reform to allow private investment in the sector, competition. But who are those who have opposed such reforms?
also fails governments (federal, state and municipal) have borrowed heavily. Banks prefer lending to governments, it is a low credit risk and high yields. A government can always increase taxes, so the banks know that the risk is low. Review the huge state debts with Nuevo Leon, Coahuila, Veracruz, Tamaulipas, etc. Have supposedly works, but with debt. And the growing bureaucracies.
reflect on it, do not go with the fake.
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