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What is Wrong with Economic Liberalization? The Mexican Case
Elena Cardero, Guadalupe Mántey, Miguel Ángel Mendoza;
Investigación Económica 2006 LXV(257)
Resumen
Inglés Español
The authors argue that as a result of their technological dependence on developed countries, semi-industrialized economies cannot share in the benefits of international trade. They contend that the free competition assumption on which the conventional international trade theory rests does not hold in reality, and that the new international division of labor is responsible for slowing down income growth and increasing poverty in many developing countries. On the basis of structuralist theory of development, the paper asserts that exchange rate depreciation in an open developing economy like Mexico cannot be relied upon to improve the trade balance. In fact, these countries are often forced to rely on overvaluing the national currency and depressing real wage rates to keep inflation in check, which in turn cause growth rates to fall and poverty to increase –as have been observed in Mexico since the early 1980´s–. The authors present two models of wage rate determination in Mexican manufacturing industry that support their hypotheses, and propose policy measures to achieve balanced growth with a more equitable income distribution

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Universidad Autónoma del Estado de México
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