<strong>Industrialisation</strong> in Mexico<strong>The</strong> problem for Mexican industry during <strong>the</strong> early and mid-nineteenthcentury was that <strong>the</strong> economic environment was not conducive <strong>to</strong>manufacturing growth on a large scale. Internal tariffs, <strong>the</strong> lack of reliableand inexpensive transport and widespread brigandage precluded <strong>the</strong>creation of a national market. Insecure property rights, a corrupt judiciaryand political instability made contracts difficult <strong>to</strong> enforce and gave rise <strong>to</strong>an uncertain institutional environment. Finally, low household incomesprecluded <strong>the</strong> development of deep and secure markets.During <strong>the</strong> three decades associated with <strong>the</strong> dicta<strong>to</strong>rship of PorfirioDiaz <strong>the</strong>se obstacles were overcome, but by this point new constraints onindustrial growth presented <strong>the</strong>mselves. <strong>The</strong>se obstacles were largelyinternal <strong>to</strong> firms. In <strong>the</strong> nearly IOO years since <strong>the</strong> onset of <strong>the</strong> IndustrialRevolution important developments had occurred in manufacturingtechnology, which both raised <strong>the</strong> minimum-efficient scale of productionand increased fixed capital costs. <strong>The</strong> Mexican market, in <strong>the</strong> meantime,had not grown in step with this technological revolution, nor had <strong>the</strong>rebeen <strong>the</strong> kind of change in labour productivity and attitudes about workthat had occurred in Western Europe. In addition, hlexico had not createdinstitutions designed <strong>to</strong> mobilise <strong>the</strong> capital needed <strong>to</strong> finance this newtechnology. Mexico was <strong>the</strong>refore unable <strong>to</strong> adapt much of this newtechnology without ei<strong>the</strong>r creating non-competitive production andmarketing arrangements or resorting <strong>to</strong> government subsidies andprotection. <strong>The</strong> result was an impressive amount of industrialisation byLatin American standards, but a relatively unimpressive industrialrevolution by <strong>the</strong> standards of <strong>the</strong> North Atlantic economies.It is conceivable that had <strong>the</strong> model of growth of <strong>the</strong> Porjria<strong>to</strong> persisted,many of <strong>the</strong>se obstacles <strong>to</strong> industrialisation might have been overcome.Incomes might have risen, educational levels might have improved, <strong>the</strong>banking system would have continued <strong>to</strong> expand and <strong>the</strong> internal marketwould have grown. Continued economic growth might have created itsown demand, eliminating <strong>the</strong> obstacles that s<strong>to</strong>od in <strong>the</strong> way ofindustrialisation. Indeed, Mexico's industrial entrepreneurs were bankingon this <strong>to</strong> happen. It was for this reason that <strong>the</strong>y often invested ahead of<strong>the</strong> market, erecting industries which were <strong>to</strong>o large for <strong>the</strong> demand <strong>the</strong>yfaced and losing money over <strong>the</strong> short run in <strong>the</strong> hope that when <strong>the</strong>market expanded <strong>the</strong>y would be in a position <strong>to</strong> take advantage of it.This, however, did not happen. In fact, <strong>the</strong> very inequalities that werean integral part of <strong>the</strong> Porfirian model of economic growth produced aRevolution. <strong>The</strong> Revolution, while it did not destroy <strong>the</strong> nation'sindustrial plant, created significant uncertainty among <strong>the</strong> industrialistclass. <strong>The</strong>se events, coupled with <strong>the</strong> onset of <strong>the</strong> Great Depression,produced a slowdown in <strong>the</strong> rate of growth of industrial investment until3 I
jzStephen H. Haber<strong>the</strong> middle of <strong>the</strong> 1930s. It was <strong>the</strong>refore not until <strong>the</strong> middle of <strong>the</strong>twentieth century, almost a century after <strong>the</strong> first rumblings ofindustrialisation began in Mexico and nearly yo years since <strong>the</strong> first largescaleindustrial enterprises were established, that Mexico began <strong>to</strong> make<strong>the</strong> transition <strong>to</strong> an industrial society in which manufacturing led <strong>the</strong>economy.
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