Marginal Revolution: Why hasn't Mexico done better?: After all they have NAFTA and democracy, sort of. Here are the thoughts of Brad DeLong. I don't disagree with Brad's discussion, here are my ideas:
- The North of Mexico would have done far better, if not for adjusting to brutal competition from China. They are in fact coping better than most people had expected.
- The North has in any case done remarkably well. This implies that the main problems are not of policy per se.
- Mexico has had a serious internal "immigration" problem, as it tries to digest massive migration from rural areas into urban areas. Many of these migrants do not have the appropriate cultural capital to support Mexican economic growth. But this problem will ease over time as the country becomes more integrated.
- The costs of crime and corruption are significant. These costs skyrocketed as Mexico became a prime route for cocaine transport to the United States. Not everything we have done for (to) Mexico has been positive.
- Mexico will undergo a demographic transition. Rising population will soon cease to swallow up so many of the per capita the gains from rising total income.
- The available data significantly understate the standard of living gains in rural Mexico. Incomes go underreported, or unreported, and new commodities are being introduced all the time.
- Policy matters less than we economists like to think.