Brazil and Mexico's manufacturing performance in international perspective, 1970-1998

This paper studies the labour productivity performances of Brazil and Mexico in international perspective by comparing them with the United States, one of the international productivity leaders, during the period 1970-99. Brazil and Mexico are compared separately with the USA, in 1985 and 1988 respectively using the International Comparisons of Output and Productivity (ICOP) method. With ICOP, detailed sectoral-specific conversion factors (unit value ratios, UVRs) are estimated to express value added per person engaged in a common currency. Brazilian productivity was 43 per cent of the US level in 1985 and that of Mexico 27 per cent of the US in 1988. The extrapolation to the 1970-99 period shows that the productivity gaps of the Latin countries with the USA widened, in particular in the 1980s. In the 1990s, Brazil managed to stabilise the productivity differential, whereas Mexico continued to loose ground relative to the USA. The paper also checks the validity of the benchmark results by confronting them with the national accounts. Moreover, the quality of the extrapolations is assessed by comparing them with benchmark comparisons for 1975.