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Productivity Growth in Mexico An Economy in Slow Motion, Regional and…
Productivity Growth in Mexico An Economy in Slow Motion
The trend of aggregate productivity growth hides, important heterogeneities across Mexican regions, sectors, and firms.
Productivity across States Is Diverging Instead of Converging
There is considerable dispersion of labor productivity across Mexican states
First, most low-productivity states
are not growing fast enough.
Second, high-productivity states keep increasing their levels of value added per worker
Labor productivity growth across regions has been led by changes in Mexico City
In sum, the (within) increase in labor productivity in Mexico City explains the behavior of overall value added per worker;
firms producing cars, parts for the aerospace industry, electronics, and other sophisticated equipment that requires state-of-the-art technology for production
Productivity dispersion is also increasing across industries and sectors.
Similarly, while some sectors have seen high multifactor productivity growth over the past two decades, productivity in other sectors has declined sharply
These firms are in the top 10 percent of firms
in the country.
Productivity in Top 10 Percent of Industries Is Rising Faster Than in Remaining 90
Percent
On the other hand, other group of firms are characterized by subsistence agriculture or
informal businesses
looks into how inter- and intra-industry structural change affects sluggish aggregate productivity growth in Mexico.
Differences in FDI and Factor Endowments Drive Productivity Differences across Regions
Exports of medium- and high-technology, products increased from 33 to 69.9 percent of total exports during the same period.
As regions that are closer to the United States have obtained most of the benefits of the economic model
The largest shares of FDI went to Mexico City, Chihuahua, and Nuevo Leon g the gap in labor productivity across states
Mexico over the past three decades was characterized by a shift fromthe primary and secondary sectors toward the tertiary
sector, which translated into limited productivity gains.
Labor accumulation, and, to a lesser extent, capital accumulation have made positive contributions to economic growth
Resource Misallocation Is Largely Explained
by High Informality Rates
The states with larger productivity gains are those with a higher share of fast-growing municipalities.
To boost productivity, Mexico can aim to tackle informality by reducing the costs of formalization for firms and workers
Mexico from closing the income, gap with respect to more advanced economies, and in doing so it has limited the reduction of poverty and inequality
Boosting productivity growth would have the largest, impact in terms of reigniting economic growth in Mexico.
Regional and Sectoral Productivity
Growth: A Story of Forking Paths
Explaining Mexico’s Low and Uneven Productivity Paths: The Stories Unite
Policy Recommendations
