Economic Performance in the Americas

Economic Performance in the Americas

The Role of the Service Sector in Brazil, Mexico and the USA

Nanno Mulder

Economic Performance in the Americas compares the economic performances of Brazil, Mexico and the USA over the past half century. As with most other high and middle-income countries their economies are service-sector orientated and have been for several decades. This book encompasses all sectors of the economy but focuses primarily on services, analysing both the main trends in the various service industries in Brazil and Mexico and the underlying forces shaping their huge expansion.

Chapter 10: Comparative Performances of the Service and Commodity Sectors

Nanno Mulder

Subjects: economics and finance, industrial economics


INTRODUCTION From 1950 to 1982 Brazil and Mexico achieved faster labour productivity growth than the USA. Since 1982 their growth has lagged behind that of the USA, which caused a widening of the gap between the three countries. An inverse relationship between productivity growth and levels may be observed. Countries with low productivity levels have a ‘catch-up7potential that is not available to those with higher productivity levels such as the USA. This is because such countries operate much closer to the ii-ontiers of technological progress. In our benchmark year, 1975, the overall labour productivity level in Brazil was 21 per cent of the US level, while in Mexico it was 27 per cent (see Figure 10.1). However, in Brazil there was a large variation between the different sectors: productivity in the primary sector was only 3 per cent of the US level, in the secondary sector 45 per cent and in services 37 per cent. In Mexico the intersector variations were somewhat smaller: 10 per cent for the primary sector, 31 per cent for the secondary, and 36 per cent for the tertiary sector. From 1950 to 1996 the share of primary sector employment fell, while the share of the services, and to a lesser extent industry, increased in Brazil and Mexico. Considering the much higher relative performance of Brazil and Mexico in the secondary and service sector, it is not surprising that movement of labour into those activities accelerated the catch-up process of these countries. 24 1 242 Economic...

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