An institutional analysis of Mexican economic growth since 1821

Includes bibliographical references.Mexico's rapid economic growth since 1940 has generated consider­able interest among writers concerned with economic development. However definitive studies of the country's progress present different and con­flicting views. The growth of modern industry did not begin in 1940, or even in the Diaz period (1876-1910), as some writers hold. Rather, today's industrial Mexico is the result of accumulated industrial technology that was introduced as early as 1830. The purpose of this effort is to document this position. The study is based on the use of the Veblen-Ayres analytical model, which is also known as the Institutional theory. In the theory, technology is seen as the dynamic force in economic progress. This force may be curbed, however, by institutional resistance to technological change. Thus, technology and institutions are the strategic variables identified by the theory. In 1830, the Mexican government established the Banco da Avio through the efforts of Lucas Aleman. The bank served as a development agency introducing new industrial technology into Mexico. A mechanized textile industry was created because of its activities. The new textile industry was not able to expand appreciably until the Porfirian era due to resistance from the established institutional system. The system included the hacienda, rigid class structure, political anarchy, and a dominant Church. These institutional arrangements were inherited from colonial times. The dictatorship of Porfirio Diaz (1876-1910) emphasized economic growth. Although no industrial revolution occurred, the growth of economic infrastructure was significant, particularly railroad building, and important new industries such as steel were begun. The greatest industrial growth came in the already established textile industry. What economic progress did take place served to increase the pressure on Mexico's existing institutions and contributed to the violent revolution in 1910 that recast the structure of Mexican society. Post-Revolutionary governments added vital new social and economic infrastructure to the level of technology provided the basis for Mexico's rapid industrial and economic growth since 1940. In addition to the accumulation of technology by 1940, Mexican institutions were capable of providing a compatible environment for the assimilation of further industrial technology. The achievement of a stable political party, land reform, reduction of the power of the Church and military, and increased social mobility have all contributed to a social system capable of translating technical knowledge into economic progress. Associated with Mexico's current economic growth is its development agency, Nacional Financiera. The agency is substantially similar to the earlier Banco de Avio in both its conception and methodology. The greater measure of success attained by Nacional Financiera was found to be due to a more permissive institutional environment and the higher level of technology from which it began operations.M.A. (Master of Arts