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Under-Rewarded Efforts: The Elusive Quest for Prosperity in Mexico
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Under-Rewarded Efforts: The Elusive Quest for Prosperity in Mexico

Santiago Levy Algazi
Highlights
  • Reforms of Mexico’s tax, labor and social insurance policies are essential to accelerate economic growth and increase social inclusion
  • Why Mexico’s growth rate average just 1.2 percent between 1996 and 2015, well below many of its Latin American peers.
  • The book looks at the relationship between the high degree of informality in the Mexican economy and productivity.

 

Informal firms are on average 50 percent less productive than formal ones, but because of misallocation, both coexist in the market. The book documents that despite many reforms, informal firms in Mexico have grown more than the formal ones, capturing a larger share of investment and employment.

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Why has an economy that has done so many things right failed to grow fast? Under-Rewarded Efforts traces Mexico’s disappointing growth to flawed microeconomic policies that have suppressed productivity growth and nullified the expected benefits of the country’s reform efforts. Fast growth will not occur doing more of the same or focusing on issues that may be key bottlenecks to productivity growth elsewhere, but not in Mexico. It will only result from inclusive institutions that effectively protect workers against risks, redistribute towards those in need, and simultaneously align entrepreneurs’ and workers’ incentives to raise productivity.

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DOI
http://dx.doi.org/10.18235/0001189
News

Mexico Misallocated

Economic growth in Mexico presents a puzzle. Mexico has followed many of the standard recommendations that are said to support economic growth.

2019-01-24
http://conversableeconomist.blogspot.com/2019/01/mexico-misallocated.html

Why Mexico has not become more prosperous—and how it could / The Economist

So what went wrong? In a groundbreaking book* Santiago Levy, the outgoing policy chief at the Inter-American Development Bank, argues that ...

2018-07-19
https://www.economist.com/news/americas/21746362-its-misshapen-economy-suffers-…

Mexico's economy struggles to reap rewards of good behaviour / Financial Times

... expressed as a share of GDP, as those in sub-Saharan Africa, said Santiago Levy, a senior official at the Inter-American Development Bank.

2018-07-16
https://www.ft.com/content/08b6e470-87c0-11e8-bf9e-8771d5404543

Los impuestos en México tienen que aumentar y rebalancearse / El País

El economista, ex alto cargo del Gobierno mexicano, cree que la exitosa inserción del país norteamericano en el comercio global no ha podido contrarrestar "fuerzas internas negativas como el régimen laboral o fiscal"

2018-07-23
https://elpais.com/economia/2018/07/21/actualidad/1532137931_623059.html
Datasets

 

Meet the Author
Santiago Levy Algazi

Santiago Levy Algazi

Mexican economist Santiago Levy Algazi became the Vice President for Sector and Knowledge on March 1, 2008. From August 2007 to February 2008, he served as General Manager and Chief Economist for the IDB Research Department.