The article studies the fall in the output/capital (OC) ratio in Mexican manufacturing, contrasting the hypotheses of high labor costs versus convergence toward the United States as drivers of Marx-biased technical change. While econometric estimations reject the labor-cost hypothesis—as do the evidence from wage-profit curves—they support the convergence one, showing in addition that convergence increased with the degree of US-Mexican industrial integration. Downward OC convergence, moreover, led to downward convergence in profit rates. Convergence aside, capital accumulation itself pushed the OC ratio down, confirming a tendency of accumulation to depress the profit rate. The estimations—for the change in the profit rate and the OC ratio—rely on a comprehensive annual panel of 17 Mexican manufacturing industries over the period 1992–2019.
BasuDeepankar. 2010. Marx-biased technical change and the neoclassical view of income distribution. Metroeconomica61 (4): 593–620.
2.
BasuDeepankarDasDebarshi. 2018. Profitability in India’s organized manufacturing sector: The role of technology, distribution, and demand. Cambridge Journal of Economics42 (1): 137–53.
3.
BasuDeepankarHuatoJulioLara JaureguiJesusWasnerEvan. 2022. World profit rates, 1960–2019. Review of Political Economy: 1−16. doi:10.1080/09538259.2022.2140007.
4.
CampbellTravisTavaniDaniele. 2019. Marx-biased technical change and income distribution: A panel data analysis. Metroeconomica70 (4): 655–87.
5.
CruzMoritz. 2015. Premature de-industrialization: Theory, evidence, and policy recommendations in the Mexican case. Cambridge Journal of Economics39 (1): 113–37.
6.
De SouzaJoao P. A.2017. Real wages and labor-saving technical change: Evidence from a panel of manufacturing industries in mature and labor-surplus economies. International Review of Applied Economics31 (2): 151–72.
7.
ElsbyMichael W. L.HobijnBartSahinAyşegül. 2013. The decline of the US labor share. Brookings Papers on Economic Activity2: 1–63.
8.
FelipeJesusKumarUtsav. 2010. Technical Change in India’s Organized Manufacturing Sector. Levy Economics Institute of Bard College Working Paper no. 626. Annandale-on-Hudson, NY: Levy Economics Institute. Accessed at: https://www.econstor.eu/handle/10419/56953.
9.
FoleyDuncan K.MichlThomas R.TavaniDaniele. 2019. Growth and Distribution, 2nd ed.Cambridge, MA: Harvard University Press.
10.
IbarraCarlos A.2019. Technical and structural change, and the fall in the manufacturing output-capital ratio in Mexico, 1990–2015. Cambridge Journal of Economics43 (3): 649–75.
11.
IbarraCarlos A.2023. Labor skill, trade and capital intensity, and the fall of manufacturing real wages: Panel evidence from Mexican industries. Journal of Globalization and Development14 (1): 21–50.
12.
IbarraCarlos A.2024a. Profit share and capital accumulation in Mexican manufacturing. International Review of Applied Economics38 (5): 457–81.
13.
IbarraCarlos A.2024b. Profits and capital accumulation in the Mexican economy. Cambridge Journal of Economics48 (3): 525–48.
14.
IbarraCarlos A.RosJaime. 2019a. The decline of the labor income share in Mexico, 1990–2015. World Development122: 570–84.
15.
IbarraCarlos A.RosJaime. 2019b. Profitability and capital accumulation in Mexico: A first look at tradables and non-tradables based on KLEMS. International Review of Applied Economics33 (3): 426–52.
16.
IbarraCarlos A.RosJaime. 2023. Trade and factor intensity, and the transmission of the global shock to labor: A panel analysis of the fall of the labor income share in the Mexican manufacturing sector. Economic Systems47 (1): 101007.
17.
International Monetary Fund (IMF). 2017. Understanding the downward trend in labor income shares. In World Economic Outlook: Gaining Momentum? ed. International Monetary Fund, 121–72. Washington, DC: International Monetary Fund.
18.
JeongSangjun. 2017. Biased technical change and economic growth: The case of Korea, 1970–2013. Research in Political Economy32: 81–103.
19.
JoffeMichael. 2024. Profit rate dynamics in US manufacturing. International Review of Applied Economics38 (1–2): 194–243.
20.
KimDeokmin. 2023. The stochastic model of technical change and profit rates: Korean economy (manufacturing sector: 1970–2015). Review of Radical Political Economics55 (2): 290–308.
21.
ManeraCarlesNavinesFerranPérez-MontielJoséFranconettiJavier. 2022. Capital productivity and the decreasing wage share in the United States: A Keynesian approach. Journal of Post Keynesian Economics45 (3): 429–53.
22.
MarquettiAdalmir. 2003. Analyzing historical and regional patterns of technical change from a classical-Marxian perspective. Journal of Economic Behavior and Organization52 (2): 191–200.
23.
MarquettiAdalmir. 2004. Do rising real wages increase the rate of labor-saving technical change? Some econometric evidence. Metroeconomica55 (4): 432–41.
24.
MarquettiAdalmirOuriqueLuis E.MorroneHenrique. 2020. A Classical-Marxian growth model of catching up and the cases of China, Japan, and India: 1980–2014. Review of Radical Political Economics52 (2): 312–34.
25.
MarquettiAdalmirC. S. PorsseMelody de. 2014. Patterns of technical progress in the Brazilian economy, 1952–2008. CEPAL Review113: 57–73.
26.
MichlThomas R.1999. Biased technical change and the aggregate production function. International Review of Applied Economics 13 (2): 193–206.
27.
Moreno-BridJuan CarlosSantamaríaJesúsRivas ValdiviaJuan C.2005. Industrialization and economic growth in Mexico after NAFTA: The road travelled. Development and Change36 (6): 1095–119.
28.
PalmaJosé Gabriel. 2005. Four sources of “de-industrialization” and a new concept of the “Dutch Disease.” In Beyond Reforms. Structural Dynamics and Macroeconomic Vulnerability, ed. JoséA. Ocampo, 71–116. Stanford, CA: ECLAC and Stanford University Press.
29.
RodrikDani. 2013. Unconditional convergence in manufacturing. Quarterly Journal of Economics128 (1): 165–204.
30.
RodrikDani. 2016. Premature deindustrialization. Journal of Economic Growth21: 1–33.
31.
SasakiHiroaki. 2008. Classical biased technical change approach and its relevance to reality. International Review of Applied Economics22 (1): 77–91.
32.
TimmerMarcel P.DietzenbacherErikLosBartStehrerRobertde VriesGaaitzen J.2015. An illustrated user guide to the World Input-Output Database: The case of global automotive production. Review of International Economics23 (3): 575–605.
33.
VillanuevaLuisJiangXiao. 2018. Patterns of technical change and de-industrialization. PSL Quarterly Review71 (285): 161–82.
