Title: Agricultural Exports: The Mexican Experience
Abstract: Since the mid-1980s, Mexican governments have implemented policies to, among other things, increase production of tradable goods, liberalize trade, and advance macroeconomic stability. Moving away from import substitution industrialization and into an export-oriented economy has, nonetheless, been a difficult and slow process. In particular, trade liberalization has revealed lack of competitiveness in domestic industries; in some occasions it has resulted in opposition from powerful interest groups; and it has reemphasized, in view of large current account deficits and the constant tax to foreign exchange imposed by debt payments, the need to promote and diversify exports. This paper is concerned with the contributions to economic growth of agricultural exports, and with the challenges that the Mexican government faces to promote agricultural exports successfully and to establish a conducive environment that will help enhance the sustainability of the process. After reviewing several theory-related issues, I will present a historical account of the salient features of Mexican agriculture, especially of agricultural exports. I will proceed with an analysis of the required characteristics of an efficient policy to promote agricultural exports, with special consideration for lessons from other countries' experiences and for major trends in the international scene. Finally, I shall give my conclusions. In theoretical terms, an analysis of agricultural exports requires two interrelated approaches: one is international trade theory; the other has to do with the expected contributions of agriculture to a country's economic growth. In regard to international trade theory, neoclassical economists have argued that higher real national income may result through exports acting as a source of effective demand that mobilizes idle resources (Adam Smith's vent for surplus). Additionally. according to Ricardo's theory of comparative advantage, in an open economy, economic growth will be the outcome of improvements in the efficiency of production brought about by following price signals of international markets and the cost signals of local technologies and resource availability(i). In opposition to these arguments, the proponents of import substitution industrialization have argued that international trade does not necessarily result in mutual benefits. According to structuralists, differences in economic structure among countries bias the gains from trade in favor of the technologically advanced and industrialized countries and against the poor countries.(ii) For Emmanuel, who as a dependencista advocated radical import substitution policies, international trade brings about transfers of reinvestable surplus from the low-wage developing country to the high-wage developed countries. In general, agriculture is expected to contribute to overall growth by increasing domestic food and raw materials supplies; by providing a growing market for domestic manufactures; by contributing to domestic savings and capital formation; and by providing foreign exchange through agricultural exports. However, as explained by Myint, the four contributions may become inconsistent with each other.(iii) Under import substitution industrialization, for example, as a consequence of the extraction of large surpluses through low prices of food and raw materials, both farm incomes and incentives to produce diminished over time. It has been argued as well that in an export promotion strategy, increases in production of agricultural exports may result in decreases in production of food for home consumption.(iv) Although food requirements may be met through imports, the contributions of agricultural exports in terms of foreign exchange could be drastically reduced. Nonetheless, supporters of free trade maintain that in an open economy, the exclusive quality of agricultural contributions is not a major problem because savings may be supplemented by foreign capital, and industrial goods may be produced for exports. …
Publication Year: 1997
Publication Date: 1997-04-01
Language: en
Type: article
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