Current Mexico Economic Model
In Mexico, the current economic model forcedsocial costs. Therefore, today priorities should be aimed at creating mechanisms for the formation of political agreements that lead to rebuilding the scope of government responsibilities;Set better balanced economic and social goals, because otherwise, economic insufficiencies would risk transforming into social insecurity and democratic disenchantment, in frustration of the young, medium and old population, as already begun to happen.
Mexico, almost unanimously, is considered a dual economy, an economy with modern and other traditional sectors, it is an economy where 57 percent of the population does not find a job in the formal sector, it is an economy where less than 20 percentof the workforce works in the manufacturing sector and that, in addition, has been decreasing since its peak a few decades ago. It is a company in which 62 percent of the population has an income lower than the well -being line, where the purchasing power of the minimum wage is similar to the decade of the sixties, where 63 percent of the populationHe has access to social security and those who have access to health services do so in a very heterogeneous way. We are one of the most unequal countries in the world, whether we measure income or wealth inequality, increasingly similar to the levels of the 19th century. Can an economy with these characteristics be called modern?
In light of the results, the paradigm of the supposed "modernization" of the country, which has dominated the mind of the design of programs, public policies and economic and social policy throughout the last twenty or thirty years is aresounding failure. Today, removing modern cell phones and flat screens, we are as old as we were in 1980;In fact, in some measures we are even more from the past.
To give a very concrete example, let’s take the growth rate of GDP per capita, the standard measure of progress at welfare levels in countries, in approximately two periods of time of the same duration: the period between 1870 and 1913 and the one thatIt goes from 1980 to 2017. In the first, the average growth of GDP per capita was 2.2 percent annual, in the second, contemporary Mexico, the growth of GDP per capita is only 0.8 percent annual. "Modernity", with certainty, did not bring growth, and growth is a necessary condition, if not enough for development.
It is a country full of monopolies, perhaps its current state of development in issues of economic competence is more similar to the one in the United States at the time of the progressive reforms of Teddy Roosevelt and Woodrow Wilson. We could say that Mexico continues in the times of the "Robber Barons" with a business climate dominated by the lack of scruples and the use of economic power to achieve political and politician power to concentrate more economic power. Calling "modern" the state of nature of these issues is, frankly, being economical with the truth.
An illustration of the above can be found if we use the database of paying taxes by moral persons for the period 2010-2015 that the SAT announced. In the data period, the Gini index of the company’s profits moves between .88 and .89, an extreme level. Only 10,000 companies, equivalent to 14 percent higher in distribution, concentrate almost 90 percent of all profits that are generated and 90 percent of the capital is concentrated in 10 percent of economic units. Companies that generate less than 30 percent of employment and that we know many of them are in high concentration markets.
An economy that still has low levels of human capital;that has badly paid work and that increasingly participates in national income;where physical capital plays a minor role (which we see at stagnated private investment levels for years and a total productivity of the factors);that in 19 of the last 26 years it is zero or negative (but that in turn has allowed the level of GDP per capita to increase). It can be explained, as Bértola and Ocampo do when analyzing the negative effects of inequality in Latin America, by the generation of income. A modern economy rewards innovation, not income extraction. This becomes an obstacle to development to the extent that those who control these income also control political power and, thus, modify the productive capacity towards activities that allow them to extract more income, not to innovate, not form human capital, insteadto go to a structural change of the economy.
We can find a plethora of examples that show that a dual and not modern economy is the correct way to describe the reality of the country. If we think in terms of infrastructure and connectivity, the south of the country lives in backwardness;If we think about the field, a good part of it practices subsistence agriculture.
The costs of the forego. In a job, José Alberro and Rainer Schwabe (2016) find that there are welfare losses in the lowest half of the distribution, both in urban and rural homes, due to market power, losses that, according to Carlos Urzúa (2008), are concentrated in the south of the country.
What monopoly power damages the economy in Mexico is equivalent to what its democratic life damages. It is obvious to say that economic power becomes political and, even so, in Mexico the same voices that defend "modernity" move away from the old democratic ideal that a citizen is equal to a vote, thinking, rather, thatA dollar is equal to a very ad hoc vote, outdated and antidemocratic.
If what we have cannot be considered as a "modern" economy and rather we think of it as a dual economy or an economy that still does not have a complete structural change.
To have an economy that has more benefit we can put these points to the test:
- Progress of low productivity activities to others of greater productivity, together with the general increase in the total productivity of the factors;That is, not only of work but of capital, including business capacity, State efficiency, improvement in human resources training through knowledge, communication, education and training.
- The reduction and even elimination of the rigidities arising from institutions created for other times, obsolete work systems, legal impediments and unproductive practices.
- The commitment to improve educational levels and interrelation between the various levels and modalities of education, and the allocation of resources to scientific and technological research, together with the stimulus to innovation.
- The evaluation of natural resources available to improve their quality and ensure their future contribution.
- The extension of the Housing and Health Services offer.
- The improvement of land productivity, agricultural production conditions and the institutional and legal organization of the agricultural sector, not only to compete in the markets, but to raise the income and quality of life of the peasantry and farmers.
- The creation of industrial production and services based on internal and external eco -efficiency and competitiveIn monopolistic positions and political control and privilege.
- The restructuring of financial intermediation systems to make bank networks improvement instruments in the business and capitalization sector, with savings incentives for the strengthening of private financing and the fiscal capacity of the State.
- The search for dynamic equilibrium strategies between the State and the business sector.
- Mexico has not completed the structural change of its economy or its society, has had advances, some more important than others, but remains far from those transformations.
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