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Productivity Growth in Mexico An Economy in Slow Motion, Aggregate…
Productivity
Growth in Mexico An Economy
in Slow Motion
Mexico’s economic model has succeeded in maintaining stable macroeconomic fundamentals
increasing export competitiveness,
promoting production diversification
shifting the economy toward more complex industries
This model, which started with the enactment of the Mexican Central bank in 1993
been very effective in improving macroeconomic stability and reducing inflation
this report seeks to understand the reasons behind the poor productivity performance in Mexico,
This section decomposes growth into contributions from factor inputs and TFP
Mexico seems to be an economy in slow motion, compared with other emerging economies
As well as sectoral growth and reallocation.
The exercise identifies low-productivity growth as the main character in the story of the Mexican economy.
human capital is diverted away from its highest value use, as the labor force is unskilled and young
Mexico’s labor accumulation potential has been, held in check by informality, migration, violence, and low female LFP
by work reasons rather than to reunite family or study, The quality of education seems to be insufficient
Insecurity and crime are problems for conducting business in Mexico, contributing to misallocation of labor, while also impeding investment.
Firms to report skill mismatches, which constrain employment and firm expansion and therefore economic growth
Labor accumulation is also constrained by a very low, rate of female LFP. If Mexican women had the same LFP as men, Mexico’s GDP per capita would be around 25 percent larger
Barriers to women’s come from both the demand and supply sides, On the demand side, economic activity and labor regulations are important barriers to the demand for women workers.
On the supply side, individual characteristics and lack of access to productive inputs are obstacles to LFP
In sectors as transport,
water, electricity, and
telecommunications
Financing Mexico’s needed public investment more public financing
Public investment, mainly in infrastructure, has not sufficed to avoid bottlenecks
Mexico will need to create fiscal
space to boost public investment by around 3 percent to PIB
Investments are paramount to diversify trade markets, , and improve access to and quality of public services
Public-private joint projects have grown
electricity and natural gas projects, as well as the Red Compartida project which is meant to develop telecommunications infrastructure
Improving the planning, coordination, and prioritization of investments across between the public and private sectors will be key to boost infrastructure
financing of the Red Compartida project helped to develop backbone telecommunications infrastructure
The overall income per capita growth rate is low
Labor productivity, measured as value added per worker, only accounts for half of the growth in income per capita
Between 2000 and 2018, labor productivity increased by 50 percent in Mexico’s
whereas demographics and employment explain the other half.
line with the low growth rate of labor productivity
the challenge of increasing income per capita is also a challenge of improving challenge of improving the efficiency
labor productivity did not change, in Mexico, decreasing during 2000–09 and recovering
during 2010–18
Aggregate Productivity Growth: The Story of an Economy in Slow Motion
Introduction
Labor Accumulation (Adjusted by Education) Has Been the Engine of Growth
Investment Has Contributed Mildly to Economic Growth
TFP Is the Main Factor Constraining Economic Growth in Mexico
