Mexican Tiger Economy

kernals12

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This chart shows how poor Spain used to be. In the early 50s, their gdp per capita was 1/3 of the US level, about the same as Mexico. That changed over the next several decades and in fact this chart understates Spain's progress since their GDP per capita is held down by unemployment. Spain's labor productivity is similar to that of Britain in fact. So what if Mexico had followed the route of its former colonial master?
 
Two very different countries geographically, politically and historically speaking. Why do you feel the need to draw the parallel between these two in particular?
 

kernals12

Banned
Two very different countries geographically, politically and historically speaking. Why do you feel the need to draw the parallel between these two in particular?
Many people draw a parallel between Britain and the United States, well Mexico was under Spanish rule for even longer than the 13 colonies were under English rule. And they were both at similar levels of development at that time.
 

kernals12

Banned
not...really...I dont think? its just good to keep mexico away from being a rentier state as per OTL
Mexico has followed the economic path of most other Latin American countries (Chile, Argentina, and Venezuela notwithstanding), most of which don't have oil.
 
Mexico, though, has a hugely different history from other high-income Latin American countries. It was never, like the Southern Cone countries were, a prosperous country with an economy driven by agricultural exports and a population dominated by recent immigrants. It was never, like Venezuela, a relatively low-population country that happened to have huge volumes of oil which could translate into massive amounts of wealth per capita. Mexico, instead, was traditionally a country with a productive and diversified economy, most significantly with a large industrial sector.

Mexico has more in common with Spain than it does with its regional peers.
 
The easiest way for Mexico post-WWII to become a developed economy is to have an earlier NAFTA. An earlier NAFTA would have forced PRI governments in the 1960s to open up Mexico's economy. Mexico was on the verge of becoming an oil importer in 1970s before the discovery of large oil reserves, which brought to short term economic prosperity from 1976-81 and long term economic stagnation especially in the most of 1980s. 1980s was the lost decade for the entire Latin America which it took until present to recover.
 

kernals12

Banned
The easiest way for Mexico post-WWII to become a developed economy is to have an earlier NAFTA. An earlier NAFTA would have forced PRI governments in the 1960s to open up Mexico's economy. Mexico was on the verge of becoming an oil importer in 1970s before the discovery of large oil reserves, which brought to short term economic prosperity from 1976-81 and long term economic stagnation especially in the most of 1980s. 1980s was the lost decade for the entire Latin America which it took until present to recover.
Mexico's economy has been opened up a great deal since the 1980s, it hasn't resulted in any catch up to the US. I think investment in infrastructure and education is what matters.
 
Mexico, though, has a hugely different history from other high-income Latin American countries. It was never, like the Southern Cone countries were, a prosperous country with an economy driven by agricultural exports and a population dominated by recent immigrants. It was never, like Venezuela, a relatively low-population country that happened to have huge volumes of oil which could translate into massive amounts of wealth per capita. Mexico, instead, was traditionally a country with a productive and diversified economy, most significantly with a large industrial sector.

Mexico has more in common with Spain than it does with its regional peers.

While I agree with your statement, Chile and Uruguay, never were especially prosperous countries with an economy driven by agricultural exports and a population dominated by recent immigrants That was Argentina, , Chile never get a especially big immigrant population, in fact Chile then to be a Immigrant source not a immigrant receptor, even today after year of positive immigration tendency less than 3% of the population is foreign born Compared to the Argentina 4,8 % or Spain 12,6%, Mexico only have a 0,99%, In his cenit Chile immigrant population never was more than 5% of the population, in Argentina was almost 50% in some regions even more, The same could be say from Uruguay, most of his immigrant population ended in Argentina, including Gardel. In the economic sector, Argentina's was the principal food producer, Chile was a more mining and industrial focused, Uruguay was also a food producer but as smaller scale than Argentina and never have the population or natural resources to compete

The best way to mexico to be more developed it´s a even early Independence, ideally little before or parallel to the USA independence, the colonial economic polices of Spain to mexico, Latin america in general, were in a word Awful, Limited, mercantilism and focused in rich extraction(is this well said?)
 
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kernals12

Banned
Argentina can be best compared to Australia until the 1931 coup, and their divergence is a classic economics problem.

That's not actually true
This dramatic transformation in Argentina’s fortunes from Maddison (1988) to Maddison (2006) appears to have been due to the addition of the informal sector to the 1990 base year. Maddison (1995, p. 143) wrote:

‘A major problem with the national accounts of Latin American economies is the assessment of activity in the informal sector. Recent official revisions for Argentina have been very substantial. Instead of a GDP totalling 2 830 million australes in 1980, it is. now estimated to have been 3 840 million (nearly 36 per cent higher)’.

Based on this statement, the logical explanation of how Argentina in 1913 became so much richer from one Maddison to the other is that toward the end of the twentieth century the Argentine government made an adjustment to its official GDP series to take into account the growth of the informal sector. To understand why an adjustment to Argentina’s late twentieth-century GDP would affect Maddison’s estimate for 1913, it is necessary to revisit the steps in his calculations.1 They are:

  1. He begins with an estimate of nominal GDP in US dollars in his more or less recent base year.
  2. He adjusts that estimate for differences in the price level, in order to arrive at an estimate in international purchasing power parity (PPP) dollars.
  3. He extrapolates backwards from that recent PPP base-year estimate using a volume index of the country’s historical GDP.
Bearing these steps in mind, it seems likely that Maddison adjusted his Argentine GDP series by adding the informal sector to his base-year GDP estimate (step 1), adjusting by the same price level (step 2), then extrapolating back using the same volume index (step 3).2

Crucially, then, Maddison’s historical GDP statistics will only be as reliable as his underlying figures for the base-year nominal GDP, the base-year price level, and the volume index. The problem with his estimates for Argentina is that the base-year nominal GDP has been adjusted for the growth of the informal sector, but the volume index has not. Hence, he has extrapolated back from the adjusted base-year estimate using an identical volume index. This is fatal for Maddison’s calculations because the informal sector grew disproportionately, which is precisely why the government felt the need to adjust its official GDP estimates toward the end of the twentieth century.

Even as the ‘Argentine paradox’ literature was exploding the 1980s, Adrían Guissarri (1989, ch. 4) was already asking the question of whether his country’s apparent decline was actually an illusion generated by the disproportional growth of the informal sector. Using a methodology developed by Vito Tanzi (1983),3 Guissarri estimated that the informal sector grew at a trend rate of 5.9 percent per year during 1930-85, whereas the formal sector grew at 3 percent per year; combined, the overall growth rate was 3.6 percent.

In Figure 1 Guissarri’s volume indices of GDP with and without the informal sector have been used to produce Maddison-style historical GDP estimates for 1930-85, this time shown relative to the United States. The result is striking: the unadjusted series produces the standard ‘Argentine paradox’ narrative, as Argentina’s GDP per capita fell from 60 percent the US level in 1930 to 37 percent in 1980; the adjusted series tells a quite different story, however, as there is no decline over this period, with the Argentine level staying roughly constant vis-a-vis the US level.
 
While I agree with your statement, Chile and Uruguay, never were especially prosperous countries with an economy driven by agricultural exports and a population dominated by recent immigrants That was Argentina,

I will grant that the effect of immigration and resource-driven economic growth were not as significant in Chile as in Argentina. Uruguay, however, did track Argentina very closely, to the extent of having a population descended substantially from southern European immigrants and an economy driven on export-focused agriculture. It was smaller, but it was the small size that is the most significant difference between Uruguay and Argentina. In other respects, the two Platine countries developed in lockstep, and continue to do so.

On the topic of Argentina and Uruguay, I recommend Eugenio Diaz-Bonillo's 2014 "Argentina: The Myth of a Century of Decline".

https://www.themaven.net/economonit...tury-of-decline-4hGmoqTg9EyqcwCcevCtjQ?full=1

Here, he not only argues that Argentina was never as prosperous as Australia, but that Argentina's real economic divergence from the high-income world came only in the mid-1970s. The misadministration of the country by the military governments of the era, coupled with a foreign debt crisis, led to a sharp decline. The country has been growing strongly enough since 1990, but there is still a lot of ground to make up.

(There are obvious parallels, I think, in the experience of Iberia after the end of their dictatorships in the mid-1970s, or of central Europe after 1990, where the shock of transition to democracy and the need to repair the damage wrough by prior dictatorships led to relative decline.)

Regarding Mexico, with its different economic history, one big difference between it and Spain is a lack of integration with its northern colossus. Even under Franco, Spain was able to profit from the prosperity of western Europe, through trade and migration and tourism and investment. Would any plausible Mexican government of the mid-20th century have been willing to try to arrange some sort of close deal with the US?
 
. . . Guissarri estimated that the informal sector grew at a trend rate of 5.9 percent per year during 1930-85, whereas the formal sector grew at 3 percent per year; combined, the overall growth rate was 3.6 percent. . .
One of the more interesting candidates for a Third Path on economic development!

Not that a country merely hits upon the right mix of capitalism and socialism, but the right mix of the cash and noncash economies. :)
 
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