ABSTRACT
This chapter is organized in four sections. The following sections refer to the periods into which we have chosen to divide the experience of Mexico's industrialization. The import substitution industrialization (ISI) period is characterized by external protection and an active role of the state in promoting an inward-oriented industrialization pattern (i.e. mainly addressed to domestic demand). The economic environment (exchange rate, inflation, fiscal deficit) was relatively stable in this phase, and particularly in the second half of the period, and the aim was to provide a favourable set of incentives to industry: in a sense macroeconomics seems to have been modelled in order to favour local industry growth. The transition period, was characterized by macroeconomic turbulence, rising inflation and massive capital outflow, particularly after the debt crisis of 1982. In this phase the necessity to restore stability represented a major constraint and the set of incentives to manufacture, combining trade liberalization, large devaluations, protected export promotion and sharp reductions of domestic demand, seems to have been the result of a lack of coordination between industrial and macroeconomic policies. The new regulatory period is, in this sense, less problematic because industrial policy was subordinated to macroeconomic priorities. Trade policies, capital liberalization, deregulation of the economy and privatization of public assets accelerated in the pursuit of deeper market driven incentives.
