1 New patterns of economic growth in developing economies Noemi Levy-Orlik UNAM-MEXICO January, 2007

2 Profound changes in the dominant production model of industrialized & emerging countries. Has LA overcome the major shortcomings of the past?

3 Hypothesis High financial gains wrong prices Dynamic sectors shifted to __ manufactures: high M coefficient, e.r or W (to control wages) Low л, bad quality of N and Δw < Δ л

4 I. New patterns of economic growth in Mexico

5 a) GDP growth (graph 1)

6 b) Productive Sector structure (table 1)

7 c) GDP spending composition (graph 2)

8 d) M and X: trend and composition (table 2)

9 e) Exchange term index (graph 3)

10 II. New patterns of economic growth (productivity and salaries)

11 a) П & GDP (graph 4)

12 a2) Productivity in the manufacture sector 5.1 High TechLow tech

13 b) Wages & real exchange rate/nominal exchange rate (graph 6)

14 b.2) Wages and exchange rate (graph 7)

15 c.1) Salaries & productivity (graph 8)

16 c2) Salaries and productivity (graph 9) High tech sectors Low Tech Sectors

17 III. New patterns of economic growth and labour quality

18 a) Growth rates (graph 10)

19 b) Unemployment (graph 11)

20 c) Labour: Temporary and permanent (graph 12)

21 IV. New patterns of economic growth and financial gains (exchange rate, prices, and interest rates)

22 a1) Productivity (1993=100) and real interest rates (graph 13)

23 a2) Financial margins (graph 14)

24 b) Over-undervaluation and interest rates (graph 15)

25 c) Exchange rate and inflation (graph 16)

26 V. Conclusions Economic openness & external capital inflows + dont guarantee strong & stable economic growth Fortifying high tech-sectors dont reduce economic dependence (M coefficient e.r. distortions)

27 Productivity remains low due reduced linkage with internal production Wages trend is downwards (below 1980) and devaluation decrease real wages Wages dont reflect productivity gains

28 Labour quality is worsen although unemployment doesnt increase Financial gains are guaranteed by exchange rate & price stability (and W) along high financial margins.