Contradictions of neo‐liberal reforms on Mexico's balance of payments and labour markets

Abstract

Following the extension of trade and capital market reform in Mexico in the mid‐1980s, manufactured exports accelerated at an exponential rate. In spite of this remarkable performance, the Trade and Current Accounts remained consistently negative, manufacturing as a share of GDP stagnated, and the share of the labour force in manufacturing diminished. Unexpectedly, Mexico's abundant and majority less‐skilled workforce experienced a worsening in the conditions of employment. In the context of trade opening and neo‐liberal reform, inherent market failures involving imperfect information and increasing returns technologies interacted with a ‘maquila’ and a service sector mode—the locus of foreign direct investment—and accounted for the contradictions.

Citation

Jonakin, J. (2006), "Contradictions of neo‐liberal reforms on Mexico's balance of payments and labour markets", International Journal of Development Issues, Vol. 5 No. 2, pp. 93-118. https://doi.org/10.1108/eb045864