Download Value added in the manufactures sector

European School of Advanced Studies in
Cooperation and Development
V INTERNATIONAL UNIVERSITY MASTER IN COOPERATION AND
DEVELOPMENT
The Mexican Outward Orientation
Strategy for Growth
Master Thesis of Stefania Martelli
Based on the work accomplished during the internship held
at UNCTAD, Division of Globalisation and Development
Studies – Macroeconomic and Development Branch, under
the supervision of Mr. Heiner Flassbeck – Senior Economist
“… virginum Vestalium more, quae, annis inter official divisis,
discunt facere sacra et, cum didicerunt, docent.”
Seneca “De Otio”
Introduction
The 50s and 60s and in different degree the 70s are the
years of import substitution strategies, especially in Latin
America. By the end of these 30 years, the growing
recognition of the severe allocative distortions associated
with
this
growth
strategy
and
the
rising
Washington
Consensus, lead an increasing number of countries to adopt
a more liberal external trade regime. According to the
Washington Consensus programme of economic reform, one
of the major expected outcomes of this strategy is the rapid
expansion of exports from developing countries, including
labour-intensive manufactures. The basic idea is that this will
in
turn
provide
economic
growth,
promote
a
greater
international and domestic equality by equalising factor
prices, raising real incomes of trading countries and making
efficient use of the nation’s endowments. In few words, trade
liberalisation is viewed as the route to create a better and
healthier micro and macroeconomic environment.
In this setting, the case of Mexico is particularly
important
as
the
country
goes
under
massive
trade
liberalisation, along with a huge rise in foreign direct
investment, both resulting from the radical “neo-liberal”
economic reforms suggested by the wide spread Washington
Consensus.
Starting from the aftermath of the debt crisis in 1982,
Mexico opens trade up first, in 1986, participating to the
General Agreement on Tariffs and Trade (GATT) and later, in
1994, in the North American Free Trade Agreement (NAFTA).
Moreover the Mexican government, during the late 1980s
and beginning of the 1990s, drastically cuts its deficit,
privatises state enterprises and relaxes decades of heavy
government regulation including restriction on foreign trade
and investment. Therefore, trade liberalisation during the
80s, initiates a series of market-oriented economic reforms
among which NAFTA in 1994, can be considered the final
touch. With NAFTA, Mexico establishes free trade pacts with
two of the largest economies of the world, namely United
States and Canada. The aim of all these policies is to lead to
3
a rapid expansion of exports, which would then absorb
Mexico's ever-increasing labour force and promoting general
economic growth. In a nutshell we can say that Mexico tries
to pursue a growth strategy using exports boom deriving
from trade liberalisation as the engine for growth. One of the
most important outcomes of these series of outward looking
policies, is the enormous increase of exports.
Fig. 1: Mexico – Exports of goods and services as % of GDP
1960 –20001
%
35
30
25
20
15
10
5
1999
1996
1993
1990
1987
1984
1981
1978
1975
1972
1969
1966
1963
1960
0
Even with no explicit incentive or subsidies to exports,
the devaluation of the peso after the debt crisis, up to 1987,
1
All
the graphs presented in this paper, unless otherwise
mentioned, are elaboration of data extracted by the 2002 World
Development Indicators CD-ROM, World Bank.
4
helped their
growth.
Moreover, the
depressed internal
market resulting from the 1982 debt crisis induced the
Mexican industry to look for external source of demand,
which were fully reached with the NAFTA. As a result,
Mexico's exports-to-GDP ratio triples since 1980 (see fig. 1).
Taking a closer look at the structure of exports we clearly see
that
this
increase
is
mainly
due
to
the
increase
in
manufacturing exports that, fuelled by foreign investment,
account in the country's total goods exports from about 9%
to 84% (see fig 2).
Fig.2: Mexico – Structure of exports 1962 – 2000
100%
80%
Manufactures
Ores and
metals
60%
Agricultural raw
materials
40%
Fuel
Food
20%
00
98
20
96
19
94
19
92
19
90
19
88
19
86
19
84
19
82
19
80
19
78
19
76
19
74
19
72
19
70
19
68
19
66
19
64
19
19
19
62
0%
The other categories of exports on the contrary even if
apparently decreasing, maintain the same level of quantity in
millions of US$. We can therefore highlight that the sole
remarkable cause of export boom is due to manufacture
5
boom which, even if bearing in mind the importance of
Mexico's geographical neighbourhood in term of market size
and absorptive capacity, still is truly exceptional.
Until now the Mexican experience seems to follow what
has been predicted by the advocates of the Washington
Consensus. Unfortunately though, an element of major
importance
of
this
phenomenon
is
the
inability
of
manufacture exports to harness its power in the overall
economy. A simple but sensible measure of this effect is
given by the comparison of average annual rate of growth of
GDP,
investment,
employment,
wages
and
productivity
during two time spans: 1970-1981 and 1982-2000 (see fig
3).
As we can see from the graph while export rate of
growth in the second period is booming (from 7.8% to
14.1%
average
annual
growth),
GDP,
manufacture,
investment, employment, wages and productivity do not
grow as much as the precedent time span. We shall refer to
this phenomenon as the “de-linkages of a dynamic export
expansion”.
6
Fig.32: The collapse of the export multiplier 1970-1981 and
1981-2000
average annual rate of growth
12%
12%
14.1
70-81
81-00
10%
10%
8%
8%
6%
6%
4%
4%
2%
2%
0%
0%
exp*

1980 prices
gdp
mf*
inv*
emp
wages*
pdd
exp = exports; mf = manufacturing sector; inv = investment; emp =
employment; wages = remuneration paid to both blue- and whitecollar workers; and pdd = productivity.

exports in both periods do not include oil. Manufacturing does not
include 'maquila'. The source used for the investment figure (Central
Bank) does not provide information for agriculture and utilities, and
for the rest, there is systematic information only up until 1994; so,
the investment growth figure in the second period refers to 19811994, and only includes mining, manufacturing, construction and
services. Due to lack of data, wages are only included until 1999.
It is therefore logical to attempt to answer these questions:
2
See Palma (2002)
7

why manufacture export growth has not been able to
serve as the “engine for growth”?

are there any macroeconomic policies, which can foster
or undermine the dynamic transmission of growth from
exports to the rest of the economy?
We will try to find some answers to these questions
analysing two facts: the low value added presented by the
manufacture sector and the huge increase in imports that
raced against exports.
8
Value added in the manufactures sector
Regarding the first aspect as noted in UNCTAD TDR
2002, Mexico presents a situation where the surge in
manufactures exports does not correspond to an increase in
the value added of the sector (fig. 4). Even worst, value
added in the manufacturing sector remains at very low
levels. The stagnant value added presented in figure, can be
attributed to the maquila industry (assembly production).
Fig.4: Mexico – Export (X), Import (M) and Value Added
(VA) of the Manufacturing sector 1980 - 2000
Billion $
140
120
100
80
60
40
20
M
X
19
98
19
96
19
94
19
92
19
90
19
88
19
86
19
84
19
82
19
80
19
78
19
76
0
VA
Source: UNCTAD database
In this particular sector Mexico presents a comparative
advantage with respect to US: unlimited supply of cheap
labour, along with the strategic geographical location and
after 1994, NAFTA, and good infrastructure deriving from the
9
previous
import
substitution
period.
Having
these
comparative advantages, during 1981-1999, maquila exports
grow faster than non-maquila (16% and 13% respectively)3
and, as this sector is practically entirely export oriented,
output growth is also particularly high, as it is the growth of
employment. On the contrary real wages and productivity is
stagnating and in particular: the stagnation of productivity
relates to the lack of incentives to invest in a sector that can
otherwise grow by adding unlimited amounts of cheap labour
while the stagnation of wages show the extent to which
labour is freely available.
The most relevant aspect of the manufacture story in
Mexico is that taking a closer look at the export oriented
manufacturing sector, excluding maquila, we can observe an
equally evident collapse of the export multiplier: the nonmaquila export oriented sector of manufacturing presents
almost the same features as the maquila one. As Palma
highlighted both maquila and non-maquila sectors presents
two main common aspects: they are both focussed on
assembly-type operations with a little use of domestic inputs
and in addition they present a significant increase in the
manufactured import-economic growth elasticity. There is
3
These data on the division between maquila and non-maquila
manufacture sector are provided by Palma (2002)
10
little doubt that these characteristics will restrict any attempt
of the Mexican economy to foster growth through exports.
Being things like that, we should try to analyse the reasons
behind such phenomenon.
As a step in order to provide some figures on the
magnitude of the phenomenon, let’s just take a look at the
net exports presented by the manufacture sector as a whole
(see fig.5).
Fig.5: Mexico – Net Exports of Manufactures 1981 –1999
5
Billion $
19
81
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
0
-5
-10
-15
-20
-25
We take into account only the manufacture sector as we
have seen that it is the most significant during the export
boom and that it accounts for more than 80% of total
exports in the 2000. During the whole period of trade
liberalisation net exports are negative which means that
manufacture imports and more than manufacture exports.
11
This situation is particularly strong in the sub-period 19872000 when imports decisively win the race against exports,
presenting an astonishing increase with the peak of -23
billion US$ during 1993.
A consideration on this data springs from the fact that
the great majority of FDI that arrived in Mexico from 1980 to
1999 were destined in the manufacture sector and precisely
many US Trans-national Corporations taking advantage of
trade liberalisation first and then NAFTA, build their factories
just across the border in order to take advantage of the
numerous cheap labour that characterised Mexico. Those
new “Mexican” firms used very little domestic products and
import almost everything from abroad. ECLAC report on
foreign investment in the export sector states:
“… these [foreign] firms, which make intensive
use of capital and intra-industry trade [i.e.
outside Mexico], generally create few jobs for
skilled works, and their linkages with the rest
of the economy are still minimal”
ECLAC 1999 Report
Being this the case, we can understand how the other
side of the growth strategy implemented by Mexico –
attracting foreign direct investment to provide a stimulus for
the internal market – failed in its purpose to promote growth.
The mean through which FDI fosters economic growth is the
increase of domestic investment, or at least if it does not
12
reduce
it.
This
phenomenon
of
increasing
domestic
investment is called “crowd in” effect, the opposite, “crowd
out”.
In order to have a feeling on this effect, we will just take
a look at the two variables – foreign direct investments and
domestic fixed investment as percentage of GDP - to see how
they behaved during the last thirty years (see fig. 5a).
Fig. 5a: Mexico – Foreign Direct Investment and Gross Fixed
Capital Formation as % of GDP 1970 – 2000
3,5
GFCF/GDP
30
25
20
3,0
2,5
2,0
15
1,5
1,0
FDI/GDP
10
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
0
0,5
0,0
2000
5
Gross fixed capital formation (% of GDP)
Foreign direct investment, net inflows (% of GDP)
From the graph two elements are quite evident: FDI
have increased enormously and fixed domestic investments
after a sharp decline during the debt crisis of 1992, do not
present any significant increase and remain at levels which
are similar to those of pre-trade liberalisation.
13
This feeling of no clear effect or slight crowd out effect
hinted by the graph, is in line with the study presented by
Agosin – Mayer (2000) that found a crowd out effect in Latin
America during the last three decades and also with the
result of Week (2001) that showed a strongly positive
relationship during 1970-1981, while non-significant in the
1980s and then negative in the 1990s.
We
can therefore conclude
that the
extraordinary
dynamism of manufacturing exports not only has been
unable to bring along the rest of the economy, but it has not
even
been
able
to
deliver
a
dynamic
rate
in
the
manufacturing itself. This result is in line with the results
found by Weeks (2001) where Mexico is classified among the
Latin American countries in which export growth was either
neutral with respect to non-export growth, or negatively
related.
From this situation we can state that Mexico, now
irreversibly settled in the path of trade openness, runs the
risk of getting locked into its current structure of comparative
advantage with its stress on unskilled or semi-skilled labour
intensive activities, thereby delaying the exploitation of
potential comparative advantage in higher tech stages of
production. This conclusion stands in the same vein as what
expressed by UNCTAD TDR 2002:
14
“According
to
the
UNCTAD/ECLAC
study,
efforts aimed at simply at attracting FDI
through macroeconomic stability and passive
investment policies run the risk of locking
static advantages inside export platforms with
minimal linkages to domestic industry.
This risk is of getting locked in is particularly
high
where
preferential
production
trade
flows
market
inputs
to
are
access
be
based
that
sourced
on
requires
from
a
developed country partner.”
UNCTAD TDR 2002
It is then legitimate to ask ourselves what were the
macroeconomic
policies
implemented
by
the
Mexican
authorities during these years and how they affected, if so,
this collapse of the engine for growth. In fact we suspect that
monetary and fiscal policies must have played some role in
the breaking down of the engine. If a government follows a
purposeful demand-compression programme, as many Latin
American governments did in the 1980s, we would expect
the stimulating effect of exports on the rest of the economy
to be quite low. Similarly, high interest rate credit rationing
associated with monetary restrain should tend to foster the
crowding-out of domestic investment by foreign investment.
15
Macroeconomic policies
As we have briefly said from the 1940 to 1970 the
dominant strategy in Mexico was import substitution - the
use of public policy interventions to promote the domestic
production of formerly imported manufactured products for
the internal market. This strategy proved to be quite fructose
in those years as it expanded the internal market for
manufactured goods, increased investment in production for
the internal market and rose income of producers; workers
and managers. Unfortunately, throughout the 70s, this
growth dynamic had outlived its forces to enhance growth
and some sort of chance was somehow compelling. During
the early 1970s Mexico tried to forestall the collapse of the
import
substitution
regime
through
massive
public
expenditure finances by foreign debt, policy that resisted up
to the 1976 when it collapsed with the devaluation crises.
Rising interest rates, falling oil prices, and a US recession
were the main external forces that put an end to that
strategy in the early 1980s. By August 1982, Mexico
announced that it could no longer service its huge external
debt and the “debt crisis” was underway. Briefly the
measures adopted by the Mexican government in the wake of
the crisis was to drastically cut its fiscal deficit and began to
run a surplus by the late 1980s. State enterprises were
privatised and regulations including those on trade, were
relaxed. This combination of austerity and liberalisation made
16
Mexico particularly interesting for the financial community
which had invested heavily in the country and that in turn
agreed to roll over the existing debt and eventually offered
some modest debt relief under the US- sponsored Brady Plan
of 1989. At the same time these policies caused drastic cuts
in the standard of living for ordinary Mexican families. Real
wages fell by between 30 and 50 percent and overall
economic growth completely stagnated leading to increased
unemployment, poverty and migration.
In 1986, Mexico joined the General Agreement on Trade
and Tariffs (GATT) committing itself to reduce its formerly
severe restrictions on imports of most industrial products.
Mexico did not give any explicit incentives or subsidies to
exports but the sharp devaluation of the peso initiated in
1987 led exports to boom in the way we already mentioned.
Still, economic growth could hardly took off presenting
growth rate that did not reach more than 4% until 1990 (see
fig.6) and wages as well as average living standards were at
the pre-crisis level.
It is in this context that rose the idea of NAFTA. Mexico
hoped that NAFTA could work as the final big stimulus to
growth, that the previous stabilisation policies, structural
adjustment and trade liberalisation had failed to achieve.
This stimulus was supposed to come from massive inflows of
foreign direct investment (FDI) that would enhance Mexico’s
export capabilities and generate an export-led boom. NAFTA
17
would guarantee that Mexico’s primary export market – the
United States – would never be closed to Mexican exports. In
few words the “value added” of NAFTA was not to lower trade
barriers which were
already very low, but
to
attract
investment and impart a growth stimulus.
Fig.6: Mexico – GDP annual growth % 1961-2000
14
%
12
10
8
6
4
2
0
19
61
19
64
19
67
19
70
19
73
19
76
19
79
19
82
19
85
19
88
19
91
19
94
19
97
20
00
-2
-4
-6
-8
We are now some years later from the sign of NAFTA
and Mexico is still not performing such a high growth rate:
what went wrong?
The growth strategy followed by Mexico during the
process of trade liberalisation during the late 80s and 90s
presents an inconsistency that deal with the concomitant
18
implementation of trade liberalisation with an erroneous
domestic policy to combat inflation4. Briefly we can say that
together with the break down of trade barriers that led to a
release of pent-up demand for imported consumer goods, the
Mexican government began serious efforts to control the
country's runaway inflation, as well as to entice back the
"capital flight" that had left the country in the 1980s. These
efforts included tight monetary policies that drove up real
interest rate and thus made Mexican financial assets very
attractive to both foreign and national investors. The result of
this combination of liberalisation and austerity produced a big
flow of "hot money" into Mexico's emerging financial market
in the early 1990s.
The same set of policies caused the Mexican peso, which
had been devalued after the 1982 debt crises reaching the
lowest peak in 1987, to begin appreciate again. As part of
the anti-inflationary campaign, the Mexican government
restricted the rate of nominal depreciation of the peso to
below the differential in inflation rates between Mexico and
United States. This policy of using the exchange rate as a
nominal anchor kept the prices of imported good from rising,
which helped to contain inflation but made imports artificially
4
Apart from affecting negatively trade liberalization these sets of
policies really helped bringing inflation down (see table Mexico at a
glance)
19
cheap for domestic consumer at the same time as import
barriers were falling (see fig 7).
As the peso began to appreciate again in real terms
after 1987, import growth raced ahead of export growth thus
putting a drag on overall Mexican growth. So in late 80s and
early 90s while the financial market were booming, real
economic growth continued to be disappointing as the rising
trade deficits kept the Mexican economy from expanding at
an adequate rate.
Fig 7: Mexico Real Effective Exchange Rate and Trade
Balance/GDP 1961 – 2000
Trade Balance/GDP
12
200
10
180
8
160
140
6
120
4
100
2
80
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
-2
1980
0
60
40
-4
20
-6
0
Trade Balance / GDP
REER 1995=100
Another important element in the Mexican story seems
to be the “confusion” made between trade and investment
liberalisation with the adoption of an outward-oriented
strategy. In this respect, a comparison with one of the so-
20
called Asian Tigers, Republic of Korea, is quite illuminating.
As a matter of fact, East Asian experience show that trade
and investment liberalisation and outward-oriented strategy
are far from equivalent. In the case of Korea, export increase
is a specific target of the national mission to develop and it is
achieved by ad hoc indirect subsidies to national enterprises.
From the 60s Korea has been quite far from wild trade
liberalisation, using ISI to protect its industry from Japan, in
a wide range of labour intensive industries, including cotton
textiles. In the 70s the subsidisation continues to protect the
new-born heavy industry. In the 80s and 90s it was
necessary for Korea to move to the more complex technology
based sector and therefore this sector underwent some sort
of indirect subsidisation.
An
important feature
of this
subsidisation is the imposed discipline of the government on
subsidy
recipient.
This
discipline
consists
on
imposing
performance standards on export targets, transparency and
other easy monitored performance indicators. In a nutshell,
Korea faced this trade off either competing in the world
market by lowering wages or deviate somehow from laissezfaire. Korea chose the second solution, which implemented
through subsidies along with the necessary discipline and
performance standards imposed on business in exchange on
government support. This choice paid off. If we sketch the
graph on manufacturing value added (see fig.8) we find that
along with its export booming, value added grows at an
21
incredible
pace,
production-trade
particularly
configuration
after
of
the
1988
major
resembling
industrial
countries.
Along with selective export subsidies, Korea applies
selective imports controls: imports that do not seriously
threaten the competitiveness of domestic industry, are
quickly liberalised while the one that seriously threaten the
competitiveness of advanced-technology industries are held
back. Although this system is estimated to cover only about
2.2 per cent of tradable by 1989 it covered the strategic
imports that Korea was planning on developing into leading
sectors in the future (Amsden).
Fig. 8: Korea – Exports (X), Imports (M) and Value Added
(VA) of the manufacturing sector
250
Billion $
200
150
100
50
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
19
78
19
80
19
82
19
84
19
76
0
M
X
VA
Source: UNCTAD database
22
In addition to this system of indirect subsidies, Korea
thanks to the accurate adjustment of nominal exchange rate
prevented any significant overvaluation of the won currency
while fiscal policy, though conservative was never allowed to
put a break on the growth process. The result of these
sensible policies both on trade and domestic macroeconomic
policy, is a positive and stable increase GDP annual growth
(see fig. 9) throughout the 80s and 90s (excluding the 1997
crisis which was soon recovered) together with a growing
rate of investment especially during the 80s.
Fig 9: Mexico and Korea – GDP annual growth % 1960 –
2000
20
%
15
10
5
19
60
19
62
19
64
19
66
19
68
19
70
19
72
19
74
19
76
19
78
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
0
-5
-10
KOREA
On
the
contrary
the
Mexico
Mexican
strategy
of
trade
liberalisation opens up the economy to huge increase in
imports before domestic producers have the time to adjust to
23
new competition and it did not guarantee that export growth
took place in the areas that are most beneficial to long-run
development of the domestic economy.
Let’s go back for a moment to the use of the exchange
rate as an anchor to fight the chronic inflation and its
compatibility with the liberalisation paradigm.
Fixing the exchange rate more or less tightly as Mexico
did, necessitates the liberalisation of capitals in order to
count on foreign influx of currencies to build enough reserves
to defend it. In a similar vein the lowering of trade barriers is
also a requisite in order to allow increased imports to place
more pressure on domestic companies and thus discourage
them from raising their prices whilst encouraging them to
achieve higher productivity. All this is in line with the
commonly held view that the Latin America crisis was
primarily caused by below standards of production efficiency
due to highly protectionist policies of import substitution.
The influx of foreign capital, favoured by the low risk
scenario drawn by the stable exchange rate, is both support
and reinforcement to the real valorisation of the domestic
currency. This in conjunction with contemporary
trade
liberalisation produces the dramatic increase in imports,
unaccompanied by a corresponding increase in exports as we
have observed in the case of Mexico. On the contrary Asian
countries before the outbreak of the crisis presented high
24
growth rate both in import and export sectors. The loss of its
competitive edge is also a reflection of the fact that Latin
America is the only region in which the USA, with its huge
external deficit, is capable of generating an export surplus.
Moreover the loss of competitiveness suffered by Mexico
and in general Latin America is also mirrored in the
qualitative
changes
undertaken
in
domestic
production
structures, in other word the weakening of the industrial
depth represented by the growing of the maquila sector. This
hints that the “new” competitiveness possible for Mexico is
only achievable at the cost of low wages which in the long
run will cause a deterioration of job quality and further
exacerbation of the income distribution patterns along with
the erosion of the already highly fragmented social system.
25
Conclusion
Starting from the early 1980s and throughout the 1990s
Mexico implemented the prevailing development strategy
that placed emphasis upon “outward orientation” and in
particular on export growth and foreign direct investment.
Mexico followed this path through trade and capital account
liberalisation both greatly sponsored by the Washington
Consensus. Following such school of thought, one would
expect growth to be transmitted through exports imparting
dynamism to the economy as a whole and by foreign direct
investment stimulating increased total investment in the
economy or at least, not reducing it. This seems not to be
the case of Mexico which saw a huge rise in exports and
foreign direct investment but did not exhibit any significant
increase in GDP growth, rather a decline.
In this paper we tried to give an answer to the trade
liberalisation part of the story, as for what concern capital
account liberalisation should need a deeper insight. In
particular we investigated over the nexus linking export and
FDI in export sector to the overall economy.
Two major inconsistencies can be found in the Mexican
policies. First, the very same trade strategy was internally
inconsistent as favoured a sector like maquila, that presented
hardly any advantages for Mexico and that therefore was a
poor candidate to be the “engine for growth”. Second, trade
policies was supposed to enhance economic growth through
26
foreign
business
but
at
the
same
time
domestic
macroeconomic and international financial policy was hostile
to industrial growth.
As this case of Mexico highlighted, we can say that even
if there is a growing consensus on the importance of export
growth in the path toward rapid economic growth, there is
still disagreement on how such export growth should be
pursued. As the case of Mexico against Korea suggests trade
policy needs to be put on the creation of new comparative
advantages and this requires selectivity in trade policy along
with a sensible exchange rate policy.
27
MEXICO AT A GLANCE
KEY ECONOMIC RATIOS
and LONG-TERM TRENDS
GDP (US$ billions)
Gross capital formation/GDP
Exports of goods and
services/GDP
Gross domestic savings/GDP
Gross national savings/GDP
Current account
balance/GDP
Interest payments/GDP
Total debt/GDP
Total debt service/exports
STRUCTURE of the
ECONOMY
(% of GDP)
Agriculture
Industry
Manufacturing
Services
Household consumption
expenditure
General government
consumption expenditure
PRICES and
GOVERNMENT FINANCE
Domestic prices
(% change)
Consumer prices
Implicit GDP deflator
Government finance
(% of GDP)
Current revenue
Current budget balance
Overall surplus/deficit
1980
223,5
27,2
10,7
1990
262,7
23,1
18,6
1999
479,4
23,5
30,9
2000
574,5
23,3
31,4
24,9
22,4
-4,7
22
20,3
-2,8
21,9
20,5
-3
21,5
20,1
-3,2
2
25,7
44,4
2,2
39,8
20,7
2,1
35
25,1
2
26,2
30,2
1980
9
33,6
22,3
57,4
65,1
1990
7,8
28,4
20,8
63,7
69,6
1999
4,7
28,8
21,1
66,5
67,1
2000
4,4
28,4
20,7
67,3
67,5
10
8,4
10,9
11
1980
1990
1999
2000
26,4
33,4
26,7
28,1
16,6
14,9
9,5
10,9
15,1
3,4
-3
15,3
-0,1
-2,5
13,8 ..
-0,1 ..
-1,6 ..
28
TRADE
(US$ millions)
Total exports (fob)
Food
Agricultural raw materials
Fuels
Ores and metals
Manufactures
Total imports (cif)
Food
Agricultural raw materials
Fuels
Ores and metals
Manufactures
BALANCE of PAYMENTS
(US$ millions)
Exports of goods and
services
Imports of goods and
services
Net trade in goods and
services
Current account balance
Financing items (net)
Changes in net reserves
1980
18.031
2.245
419
12.050
1.166
2.148
22.144
3.571
660
438
886
16.579
1990
1999
2000
40.711 136.391 166.424
4.741
7.304
8.189
635
852
924
15.301
9.742 16.074
2.319
2.007
2.223
17.705 116.179 138.915
43.548 148.648 182.635
6.373
7.864
8.622
1.538
2.187
2.468
1.663
3.181
5.378
1.264
3.350
3.871
32.702 128.167 158.016
1980
1990
1999
2000
22.622 48.805 148.125 180.211
27.601 51.915 156.445 191.895
-4.979
-10.422
11.239
-817
-3.110
-8.320 -11.685
-7.451 -14.324 -18.157
9.754 18.602 25.307
-2.303 -4.278 -7.150
All data are from 2002 World Development Indicators CDROM, World Bank
29
List of figures
Fig. 1: Mexico – Exports of goods and services as % of GDP
1960 –2000 _________________________________________________________ 4
Fig.2: Mexico – Structure of exports 1962 – 2000 ___________________ 5
Fig.3: The collapse of the export multiplier 1970-1981 and
1981-2000 __________________________________________________________ 7
Fig.4: Mexico – Export (X), Import (M) and Value Added (VA)
of the Manufacturing sector 1980 - 2000 ____________________________ 9
Fig.5: Mexico – Net Exports of Manufactures 1981 –1999 __________ 11
Fig. 5a: Mexico – Foreign Direct Investment and Gross Fixed
Capital Formation as % of GDP 1970 – 2000 _______________________ 13
Fig.6: Mexico – GDP annual growth % 1961-2000 _________________ 18
Fig 7: Mexico Real Effective Exchange Rate and Trade
Balance/GDP 1961 – 2000 _________________________________________ 20
Fig. 8: Korea – Exports (X), Imports (M) and Value Added (VA)
of the manufacturing sector ________________________________________ 22
Fig 9: Mexico and Korea – GDP annual growth % 1960 – 2000 ____ 23
30
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