Urban and Regional Prosperity in a Globalised New Economy
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Urban and Regional Prosperity in a Globalised New Economy

Edited by Roger Sugden, Rita Hartung Cheng and G. Richard Meadows

There is currently a popular view that the world is undergoing profound changes in the fundamental relationships upon which it is organised. In particular, there is widespread talk of a ‘globalised’ economy, facilitated by and associated with ‘new’ technologies and practices. There is a further consensus that within this ‘globalised’, ‘new’ economy, regionalisation in some form is important. The aim of this volume is to address these topical issues, presenting perspectives from which they can be analysed and exploring specific aspects in greater detail. The contributors provide a framework for understanding current trends, and suggest approaches that highlight appropriate ways forward in the context of both opportunities and dangers. In doing so, they discuss specific cases and explore detailed policy possibilities, including the prospect of stimulating change through multinational engagement and debate.
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Chapter 3: Regional prosperity in a globalised economy: evidence from Mexico

Kaye G. Husbands

Extract

3. Regional prosperity in a globalised economy: evidence from Mexico Kaye G. Husbands 1. INTRODUCTION The impact of trade liberalisation on economic welfare is typically measured by changes in the volume of trade, output, employment, productivity, and the net flow of physical and portfolio capital. While these are adequate static measures of economic activity, they do not capture a countryÕs dynamic capabilities that indicate the potential for long-term growth. Therefore, the assessment of NAFTAÕs (North American Free Trade Agreement) effect on economic welfare, for example, should take into account the influence of trade liberalisation on technological change, especially in the case of Mexico. MexicoÕs road to internationalisation has taken about 20 years. Protectionist policies of the 1960s and early 1970s gave way to export promotion and tariff reduction policies in the late 1970s through to the present. Mexico joined the GATT (General Agreement on Tariffs and Trade) in 1986, NAFTA was initiated in 1994, and Mexico is now poised to be a part of the Free Trade Agreement of the Americas in 2005. The reconfiguration of MexicoÕs industrial structure accompanied the move to freer trade. Industrial policies that protected infant industries in the 1960s were replaced by government policies in the 1990s, which granted national (Mexican) status to foreign (non-indigenous) firms. As trade liberalises and as most barriers to ownership of capital by foreign companies fall, foreign companies are increasingly becoming the sources of local production and innovation. The critical question of this chapter is: does...

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