The Mexican economy has gone through radical transformations in the past 7 years which have been reinforced during the Salinas administration. From the early 60s up to the mid-eighties, Mexico tended to pursue an inward-oriented development strategy. Those economic policies affected negatively the agricultural sector, especially through the indirect effects of the macroeconomic policies. The paper analyzes the role of the agricultural sector in the process of liberalization. It is argued that strategies to develop agriculture must also focus on policies outside the sector, that the level and rate of economic growth is particularly sensitive to investment in public goods, and that an over-investment in these goods might be justified if it induces rural households to engage in political activity that will prevent a movement towards the old policy regime once an economic crisis is resolved.
[Show abstract][Hide abstract] ABSTRACT: Changes in welfare are computed as the combined effects of technological progress (TFP), and terms of trade for the NAFTA signatories. Nonparametric methods are used to derive indices of output, TFP, terms of trade, and welfare from aggregate time-series data. Results indicate the importance of both TFP growth and terms of trade to welfare in all three countries. An analysis of TFP growth suggest that increased openness of the Mexican economy augments this rate effect through, for example, the increased imports of more modern intermediate factors while, for the more open economies, the NAFTA trade effects are small. Hence, other Latin American countries joining the NAFTA agreement may experience gains in TFP growth similar to Mexico.
The North American Journal of Economics and Finance 02/1995; DOI:10.1016/1062-9408(95)90016-0 · 0.76 Impact Factor
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