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Understanding Mexico’s Economic Underperformance

August 2, 2012

Understanding Mexico’s Economic Underperformance (PDF)
Source: Migration Policy Institute

Despite major economic reforms, fiscal discipline, privatization of state-owned enterprise, and strong growth in foreign trade and investment during recent decades, Mexico has underperformed economically relative to comparably situated nations. The report presents four arguments as to why Mexico has not sustained higher rates of economic growth: poorly functioning credit markets that inhibit long-term growth; unbalanced incentives toward informality in the labor market; inefficient regulation that diminishes the country’s comparative industrial advantage; and international competition, especially with China, which undermines export strength. The author offers policymakers a road map to expand economic opportunities.

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