Economic growth in Mexico presents a puzzle. Mexico has followed many of the standard recommendations that are said to support economic growth.
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.
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.
So what went wrong? In a groundbreaking book* Santiago Levy, the outgoing policy chief at the Inter-American Development Bank, argues that ...
... expressed as a share of GDP, as those in sub-Saharan Africa, said Santiago Levy, a senior official at the Inter-American Development Bank.
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"