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Assessing the Obstacles toIndustrialisation : The MexicanEconomy, I 8 30-1 940*STEPHEN H. HABERAfter England began what came to be known as the First IndustrialRevolution at the end of the eighteenth century, industrial technologyquickly diffused throughout the nations of the North Atlantic. Withinfifty years of the first rumblings of British industrialisation, the factorysystem had spread to Western Europe and the United States. LatinAmerica, however, lagged behind. It was not until the twentieth centurythat manufacturing came to lead the economies of Latin America and thatagrarian societies were transformed into industrial societies.This article seeks to understand this long lag in Latin Americanindustrialisation through an analysis of the experience of Mexico duringthe period 1830-1940 The purpose of the paper is to look at the obstaclesthat prevented self-sustaining industrialisation from taking place inMexico, as well as to assess the results of the industrialisation that didoccur.The basic argument advacced is that two different types of constraintsprevailed during different periods of Mexico's industrialisation. Duringthe period from I 8 jo to I 8 80 the obstacles to industrialisation were largelyexternal to firms : insecure property rights, low per capita income growthresulting from pre-capitalist agricultural organisation, and the lack of anational market (caused by inefficient transport, banditry and internaltariffs) all served as a brake on Mexico's industrial development. During* Earlier versions of this article were presented at the 'K'hy the Lag in Latin AmericanIndustrialization?' conference at Harvard University, the Stanford University SocialScience History Workshop, and the Conference of the California Intercampus Groupin Economic History. Jeffrey L. Bortz, Frederick P. Bowser, Gregory Clark, John H.Coatsworth, Kenneth L. Sokoloff and John D. K'irth, as well as an anonymous referee,made detailed comments on earller drafts. Research for this article was funded bygrants from the Latin American Program of the Social Science Research Council andthe Fulbright Program. The usual disclaimers apply.Stephen H. Haber is Associate Professor of History at Stanford University/. Lot. Amrr \tun 24, I -3 r Pr~nfed in Greaf Britain
2 Stephen H. Hailerthe period I 880-1 910 the obstacles to industrialisation were largelyinternal to firms. These factors included the inability to realise scaleeconomies, high fixed capital costs and low labour productivity. Duringthe period from 1910 to 1930 these internal constraints combined withnew external constraints - including the Revolution of I 9 I 0-1 7, thepolitical uncertainty of the post-revolutionary period and the onset of theGreat Depression - which further slowed the rate of industrial growth.This article is organised into three sections, each of which takes up oneof these periods in detail. Each section begins with a discussion of theobstacles to industrial growth and then assesses their impact on thestructure and nature of manufacturing. The article ends with therekindling of Mexican industrial growth in the mid- I 930s. The outcomesof that wave of growth, which stretched through the mid-197os, are notdiscussed in detail here, since that period has been written aboutextensively by other scholars.Mexico is chosen for study because, of all the countries of LatinAmerica, it was the most successful industrialiser prior to the Second\YTorld War. As early as the I 830s cotton textile manufacturing in Mexicobegan to take place in a factory setting and by the 1890s Mexico wasproducing a wide range of goods in large-scale, vertically integratedenterprises. In fact, many of Mexico's present-day industrial giants, someof which form the nuclei of large conglomerates, date from the end of thenineteenth century. Examples can be found in the steel, cement, glass,explosive, cigarette, soap, cotton and wool textile, paper and beerindustries.Yet while industrial development began in Mexico quite early relativeto the rest of Latin America, the process of self-sustaining industrialisationthat took hold in England or the United States did not occur. Instead, aseries of obstacles produced a truncated process of industrialisationdependent on government intervention, lacking in backward linkages tocapital goods production, characterised by oligopoly and monopolyproduction, and dominated by entrepreneurs following rent-seekingstrategies.a-lssessing the obstacles to industrialisation, 1830-80In looking at the economic history of Western Europe and the UnitedStates, scholars have pointed to a number of features of those economieswhich encouraged rapid rates of economic growth. Among the featurescommonly mentioned are the availability of low-cost transport, a relativelyeven distribution of income, highly productive agricultural sectors, lowentry costs for early manufacturers, and the development of legalinstitutions designed to protect property rights and facilitate commerce.In short, it is generally agreed that those economies which were already
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