Julio López G.
This paper proposes an explanation of Mexico's economic evolution during the period in which its neoliberal strategy has been consolidated and consistently implemented. The focus is on global issues. The paper provides an interpretation of macroeconomic developments and the factors behind Mexico's slow growth, with an emphasis on economic policies and their consequences. A particularly important factor is the phenomenal growth of the import coefficient. On the basis of previous findings, the paper also presents some prospective scenarios for Mexico. The main purpose of the exercises is to show the difficulties faced by Mexico, which is very open to international trade, in combining fast growth with external balance.
Verónica De Jesús Romo and Julio López Gallardo
In this paper we study the determinants of the real exchange rate (RER), analysing in particular its association with the share of wages in output. We model the behavior of the RER against the US dollar of the domestic currency of three countries: Mexico, Korea, and France. We specify econometric vector autoregression (VAR) models and find for each country a long-run relation for the RER. In the three cases, we identify a negative association between the RER and the wage share and the RER, and the difference between the domestic and the US nominal interest rate. We also find that the RER is positively associated with labor productivity in Korea and France, but negatively associated in Mexico. We then suggest theoretical reasons for the type of associations found. As a corollary, we discuss the reasons that may explain why the RER tends to return to a long-run ‘normal’ value.
Julio López and Fernando J. Cardim de Carvalho
Gerardo Fujii-Gambero, Manuel García-Ramos and Julio López-Gallardo
A very important achievement associated with Mexico’s increased integration into the international economy is the excellent performance of its manufacturing exports. This contrasts with the evolution of production of tradable goods for the domestic market, where a formidable rise in the import coefficient and in the elasticity of imports with respect to output has occurred. The main objective of the authors’ research is to discuss Mexico’s international trade experience. First, they elaborate on the well-known Prebisch–Thirlwall equation for external constraint on growth, expanding the equation to consider different types of exports, and different types of imports. After that, they empirically study the evolution of imports, to ascertain how much of its growth can be accounted for by the export sector, and how much of it has been due to a rise in the import coefficient of production for the domestic market. They conclude by offering some policy recommendations about trade and economic growth.