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

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wielded political power and influence it was virtually impossible toconduct business of any kind.12 Since the government changed hands inthe early nineteenth century on an almost monthly basis (Mexico had 7jpresidents between 1821 and 1876), access to those who wielded thepolitical power necessary to enforce property rights constantly shifted aswell. The net result was an arbitrary institutional environment that madefree enterprise problematic.The ramifications of these various institutional and social factors wereseveral. First, it meant that the Mexican economy could not grow.Secondly, because of the lack of a robust economy, the Mexican statecould not defend itself from external or internal attack. Indeed, it wasduring this period that the nation lost nearly half of its territory to theUnited States, saw the secession first of the Central American provincesand later the Yucatan, and was successfully invaded by France. Finally,these factors served to discourage industrial development. Manufacturersfaced a divided and shallou~ market, an uncertain institutional environmentand a contracting economy.\%'hat is perhaps most surprising about the economic history of thisperiod is the amount of industrial development that did occur. The historyof early Mexican manufacturing is still far from written, but the picturethat does emerge indicates an impressive amount of industry relative tothe other countries of Latin America. In a way, some of thisindustrialisation was due to the very features that discouraged a morecomplete and self-reinforcing process of industrial growth. High internaltransport costs protected small manufacturers from the onslaught ofBritish goods. The ability of the well-connected to manipulate the state totheir own advantage produced a government finance bank (capitalisedfrom import revenues) which lent the majority of its portfolio to its ownboard members. The need for government revenues produced tariffs, bothfederal and state, which served to afford some protection to industry.The best-developed and fastest-growing of Mexico's nineteenth-centuryindustries was cotton textiles. In I 843, after a I 2-year period of investmentand growth (a small fraction of which was subsidised by loans from thegovernment-sponsored Banco de Avio, which existed from I 8 30 to I 842),the nation boasted 5 9 cotton textile factories, the great majority of whichwere located in the states of Mexico and Puebla, producing primarily forthe Mexico City market. These firms processed some 10.6 million kilos ofraw cotton into yarn, most of which was sold to independent weaversthough some was also processed into cloth in the factories. No data are'"oatsworth, 'Obstacles to Econorn~c Growth', p. 98; David VI'. Walker, Business,Kinshrp and Politics: The 12/lartrkey de Rio Fami/y zn i!lexico, rtzj-rX67 (.-lustin, Texas,1986).
8 Stephen f-1. f-Jaheravailable on the number of workers employed in I 842, but it was probablyin the area of ten thousand.13Eleven years later the number of active mills had actually declined toonly 42. Other indicators suggest, however, that the situation hadimproved for the remaining mills. If we use raw cotton consumption asa proxy for output (which eliminates the problems associated withmeasuring output in goods of different types and different qualities overtime), the data indicate a rise in production of I 9 %.'"his increase mayhave been due to the increase in the number of machines in service, whichgrew by 18 O/O. Lack of accurate labour-force data makes it difficult toassess the growth of labour productivity.By I 877, the end of the early period of Alexican manufacturing, the sizeof the cotton-textile industry had increased significantly since the I 8 5 0s.Mexico now had 92 cotton mills, though these were somewhat smaller insize than the 1854 factories: the average mill now worked only 2,7j 3spindles with 128 workers, compared to 3,004 spindles with 264 workersin 1 8 ~ ~ . ~ ~In comparison to the United States, this was a modest textile industry.Mexico's zjj,z7o ring spindles in 1877 was an extremely low figurecompared to the 10.7 million spindles in the United States in 1880.16Compared to other Latin American nations, however, this was quite asizeable industry. Brazil, for example, in 1866 possessed but nine mills,employing 768 workers and 14,875 spindles. By 1881 the number ofBrazilian mills had increased to 44, and now employed 60,419 spindles,but this was still only one-quarter of the number in Mexico."Besides cotton textiles other important industries existed as well,though none functioned on as large a scale. Unfortunately, little in the wayl3 Secretaria de Hacienda y Credito Pliblico, Documentos para el estudio de la industriali~acidnen Me'xico, 1837-1841 (Mexico, 1977), doc. 5 ; Ministerto de Fomento, Estadistica delDepartamento de Mixico (Mexico, 18j4), doc. 2. For a discussion of the Banco de Aviosee Robert A. Potash, The Mexrcan Government and Industria/ Development in the EarlyRepublic: The Banco de Az*io (Amherst, 1983). The literature has tended to overestimatethe role of the bank in financing illexico's early industrialisatlon. The total loans of thebank to cotton textile manufacturers from 1830 to 1842 came to yo9,ooo pesos, but inI 8 54, when there were fewer mills in operation than in I 842, the total value of the plant,equipment, and buildings of the industry (valued at acquisition cost) xvas 8,872,95 Ipesos, indicating that the bank could onl!- have been responstble for six per cent of thetinance capital of these enterprtses.'' hfinisterio de Fomento, Estadhtica del Departamento de Alixico, doc. 2. '' Calculated from ijid.; and Secretaria de Hacienda, Estadljtica de la RepliDlica ,\lexicana (Mexico, 1880), cuadros de industria.l6 US Bureau of the Census, Census oJ~Tlanqactures, 1879." A. 1'. de Borja Castro, 'Relatorio do segundo grupo', in Antonio Jose de Souza Rego,Relatorio da segunda exposipio nacionaide 1866 (Rio de Janeiro, I 869), p. 49; hfin~sterio deTrabalho, Industria, e Comercio, Comisio Executiva Textil, ~nd&tria textri algoderra(Rlo de Janeiro, 1946), p. 5 I.
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