Working Paper 693

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Catch-up Growth Followed by Stagnation: Mexico, 1950–2010

Timothy J. Kehoe - Consultant
Felipe Meza

Revised November 27, 2012

Abstract
In 1950 Mexico entered an economic takeoff and grew rapidly for more than 30 years. Growth stopped during the crises of 1982–1995, despite major reforms, including liberalization of foreign trade and investment. Since then growth has been modest. We analyze the economic history of Mexico 1877–2010. We conclude that the growth 1950–1981 was driven by urbanization, industrialization, and education and that Mexico would have grown even more rapidly if trade and investment had been liberalized sooner. If Mexico is to resume rapid growth — so that it can approach U.S. levels of income — it needs further reforms.


Published In: Latin American Journal of Economics (Vol. 48, No. 2, November 2011, pp. 227-268)

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