Why isn't Mexico rich?
Why isn’t Mexico rich?
Reading Report
Mexico has not sustained higher rates of economic development, by a malfunction of the credit markets and distortions in the input source is not traded, and perverse incentives that cause lack of formality and create a drag on productivity growth.
“Over the last three decades, Mexico has aggressively reformed its economy, opening to foreign trade and investment, achieving fiscal discipline, and privatizing state owned enterprises. Despite these efforts, the country’s economic growth has been lackluster, trailing that of many other developing nations.”
There are a lot of reasons why Mexico isn’t rich but in the paper the author describe four as the principal reasons:
1. The failures in the provision of credit.
2. Informality and its link with social policy.
3. The lack of regulation and the unequal concentration of power in monopolies.
4. Vulnerability to foreign trade, particularly the export growth of China.
The granting of credit is critical to the economic development process. Without mechanisms to move savings from lenders to borrowers, the country is unlikely to seize opportunities for productive investment. one possibility is that Mexican law makes it particularly difficult for banks repossessed the defaulters and is linked to the other possible explanation is that lenders will not lend to people who perceive themselves as poor criteria or risky, due to the weakness of the law enforcement if they do not pay. Besides the capital returns are up to five times the market interest rate, demonstrating the difficulty of having credit available to small businesses.
Since the 1994–95 banking crisis, Mexico has overhauled its financial regulations. It has modernized accounting standards, permitted foreign ownership of banks, set reserves according to the riskiness of bank loan portfolios, modified deposit insurance, and sought to prevent insider lending.
Reading Report
Mexico has not sustained higher rates of economic development, by a malfunction of the credit markets and distortions in the input source is not traded, and perverse incentives that cause lack of formality and create a drag on productivity growth.
“Over the last three decades, Mexico has aggressively reformed its economy, opening to foreign trade and investment, achieving fiscal discipline, and privatizing state owned enterprises. Despite these efforts, the country’s economic growth has been lackluster, trailing that of many other developing nations.”
There are a lot of reasons why Mexico isn’t rich but in the paper the author describe four as the principal reasons:
1. The failures in the provision of credit.
2. Informality and its link with social policy.
3. The lack of regulation and the unequal concentration of power in monopolies.
4. Vulnerability to foreign trade, particularly the export growth of China.
The granting of credit is critical to the economic development process. Without mechanisms to move savings from lenders to borrowers, the country is unlikely to seize opportunities for productive investment. one possibility is that Mexican law makes it particularly difficult for banks repossessed the defaulters and is linked to the other possible explanation is that lenders will not lend to people who perceive themselves as poor criteria or risky, due to the weakness of the law enforcement if they do not pay. Besides the capital returns are up to five times the market interest rate, demonstrating the difficulty of having credit available to small businesses.
Since the 1994–95 banking crisis, Mexico has overhauled its financial regulations. It has modernized accounting standards, permitted foreign ownership of banks, set reserves according to the riskiness of bank loan portfolios, modified deposit insurance, and sought to prevent insider lending.