ABSTRACT
Introduction There are striking similarities between China and Mexico’s economic development over the last quarter century. There are also significant differences. Like Mexico, China’s economic model was not performing well and needed reforms, including export promotion. Like Mexico, China was a one-party state during the period of reform (Mexico democratized in 2000). Like Mexico, China has sought to attract foreign direct investment (FDI) into manufacturing and high technology sectors to gain access to technology. As we will see, this is where the similarities end. China’s annual average per capita growth rate has topped 8 percent over the last three decades, while Mexico’s has been barely about 1 percent. China’s annual average growth rate in manufacturing value added has been well over 10 percent since 1980, whereas Mexico has been closer to 3 percent. China is becoming the manufacturing powerhouse of the world economy and an increasing source of innovation, moving up the technology ladder from assembly-based manufacturing activity. In Mexico, manufacturing remains at the low end of the technology ladder and is losing its competitiveness relative to China (Gallagher and Porzecanski 2008; Gallagher et al. 2008; Pizarro and Shafaeddin 2007; Dussel Peters 2005, 2007). We show that, on the one hand, Mexico’s performance is in part a function of a neo-liberal mindset that sees a very limited role for the state while integrating into the world economy. China, on the other hand, followed a pro-active globalization strategy. Mexico’s route to international integration has come at the expense of industrialization and learning; China’s pro-active approach has made it the manufacturing powerhouse of the world economy. The purpose of this chapter is to examine the extent to which government policies toward industrial learning, which enhances value added in exports, and subsequent development have differed in the two countries over the past quarter century. The chapter is divided into four sections following this introduction. The first section is a short literature review on industrial learning. The second section examines the case of Mexico; the third section analyzes China. The last section summarizes our main findings and draws lessons for research and policy.
