Economic stagnation in Mexico, manufactures and increasing returns: A kaldorian approach

The main goal of this paper is to investigate, from a macroeconomic and regional perspective, the nature and conditions of existing economic stagnation in Mexico since 1982, with special emphasis on the period 1993-2010. Using Kaldor's theory as a framework it is assumed that manufactures are the engine of economic growth. Econometric results allow us to confirm this hypothesis. Thus, the lack of dynamism of manufacturing is the main cause behind the low rates of economic growth and employment in Mexico. Based on these findings, the paper suggests the design of a new industrial policy for competitiveness, whose basic objective is to increase the rate of growth of this sector in order to contribute to the improvement of the performance of the Mexican economy and its regions.