The political economy of underdevelopment in Mexico: An institutional assessment of labor market outcomes

In the past two decades Mexico has experienced democratic transition and economic modernization, while significantly increasing its volume of foreign direct investment and manufactured exports. Despite these accomplishments, Mexico continues to confront high rates of unemployment, poverty, and sluggish economic growth. This study seeks to understand why democracy and free markets have not produced better results for economic development in Mexico. Traditional explanations juxtapose the tensions between policy choices and economic outcomes. This study differs in that it explains the shortcomings of export-led growth in Mexico as a product institutional norms rather than bad policy. It pursues three aspects of the problem: (1) legacies of corporatism; (2) maquilization of the manufacturing sector; and (3) migration. I conclude that the continuity of corporatist institutions in the Mexican political economy has led to inefficient or dysfunctional patterns of economic development