Assessing the Obstacles to Industrialisation: The ... - Innovation

- -I 8Stephen H. Haberdollars) in 1910, compared to $807 in Great Britain and !$1,03j in theUnited States.'" In addition, the distribution of this income was highlyskewed. A redundant labour force and highly capital-intensive methods ofproduction suggest that most of value added went to capital, not tolabour. In fact, the income of the average household was so low that theconsumption of cotton cloth was highly sensitive to changes in the priceof corn, which along with beans and chiles made up the largest part ofthe diet of Mexico's working class."This uneven and limited market had to combine with a relativelysophisticated and expensive technological base. hlexico now had a larger,better integrated market than it did in the 184os, but there had also beensignificant changes in manufacturing technologies since that time, puttingmany industries out of Mexico's reach. In general, these advances loweredunit costs of production by taking advantage of economies of scale andeconomies of speed. Thus, the optimal size (the scale of production atwhich unit variable costs would be minimised) of firms increasedsubstantially. This not only prevented Mexico from entering many lines ofmanufacturing, but also shaped the industries which did develop inseveral significant ways.Since the minimum-efficient scale in capital goods production hadincreased, and since capital goods industries now required well-developedscientific and engineering capabilities, Mexico had little choice but toimport its capital equipment.46 Thus, hlexico's blast furnaces and rollingmills came from the United States, the high-speed cigarette machineryfrom France, the paper-making machinery from Switzerland, the textilelooms, spindles, and other equipment from England, Belgium and theUnited States. Although this certainly sped up the process of earlyindustrialisation," this imported technology, designed for massa variety of reasons. In the first place, Llexico did not in fact hare a legal minimumwage prior to the 1930s. Secondly, the authors did not publish the sources or methodsused, so there is no \La\ of knoulng exactl\ what the 'minlmum wage' figuresrepresent. It is most likely the case thatthe reported figures represent the lowest wagerate that the researchers could find for a particular year, which is not, to put it mildly,a systematic approach to gathering wage data." Coatsworth, 'Obstacles to Economic Growth', p. 82.EL Economists ,\lexicano, 7 Llay 1904. p. "4.36hlexico's investment in human ca~ital uras extremelv low. The educational svstemserved only the few, with the vast majority of the population having almost no formalschooling and aery low levels of literacy. In 1895 only 14% of the population couldread and write. See Direccidn General de Estadistica, Estadisticas sociales del Porfiriato(Mexico, 19j G), p. 123." Alexander Gerschenkron made this point about the role of imported technology forlate developers in Eastern Europe. See his Economic Backwardness in HistoricalPerspecti~se:A Book oj' Essays (Cambridge, 1962), ch. I.