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The Relevance of the Theory of Sectoral Clashes to the Mexican Economy

Published online by Cambridge University Press:  24 October 2022

Luciano Barraza
Luciano Barraza*
Affiliation:
Banco de Mexico
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In the first part, I will describe briefly the intuitive relevance of Professor Markos Mamalakis' “Theory of Sectoral Clashes” to the Mexican case. In part II, I will briefly comment on aspects of the theory which are relevant to empirical verification. And finally, in part III, I will attempt to derive and test some of the empirical implications of this hypothesis.

Type
Topical Review
Information
Latin American Research Review , Volume 4 , Issue 3 , Fall 1969 , pp. 73 - 87
Copyright
Copyright © 1969, by Latin American Research Review

Footnotes

*

Thanks are due to Fernando Urbina for his help in the implementation of the empirical part.

References

NOTES

1. See Markos Mamalakis, “The Theory of Sectoral Clashes” LARR, present issue. This essay will be referred to hereafter as Theory of Sectoral Clashes.

2. In the second and third parts of the present paper the wage-employment hypothesis of Mamalakis' Theory of Sectoral Clashes is discused and tested. It may be pointed out that the presentation of this hypothesis has been omitted from the version of the theory published in the present issue of LARR because of space limitations. The wage-employment hypothesis is described in detail, however, in Markos Mamalakis, “Teoría de los choques sectoriales: segundo ensayo” El Trimestre Económico, México, Abril-Junio de 1969, Núm. 142, pp. 215-246. This essay will be referred to hereafter as Choques sectoriales: segundo ensayo.

3. The so-called traditional pattern; see Mamalakis, Theory of Sectoral Clashes, op. cit.

4. Luciano Barraza, “A Three Sector Model of Growth for Mexico,” Ph.D. Thesis—University of Wisconsin, 1968, pp. 14-16.

5. See M. Mamalakis, Theory of Sectoral Clashes, op cit.

6. See L. Barraza op. cit., page 36.

7. Mamalakis, Theory of Sectoral Clashes, op. cit.

8. G. M. Bueno, “La estructura de la protección efectiva en México en 1960.” Mimeographed Paper. El Colegio de México.

9. Mamalakis, Theory of Sectoral Clashes.

10. I prefer to concentrate on the major effects that are more fully developed, instead of the corollaries that are presented without much discussion, particularly since these corollaries do not necessarily follow from the initial axioms.

11. M. Mamalakis, Choques sectoriales: segundo ensayo, pp. 218-224.

12. Ibid., p. 219.

13. “Changes in the production process that can be considered natural. These changes include higher efficiency, technological innovation, higher quality of labor, rising exports and so forth.” Mamalakis, Theory of Sectoral Clashes, op. cit.

14. These are proxies for the normal effect. Clearly the higher the income elasticity of demand for a sector, the greater the shift in the value of the marginal product of labor (demand for labor) for a given shift in income. Change in output per man is used as a proxy for the level of all other inputs and technological change. It would have probably been better if the rate of change were used as a proxy.

15. The branches were defined by the input output matrix.

16. Clearly, the order of the signs is not necessarily opposite to what is expected in a neoclassical model. In fact, these results tell us clearly that the employment equation is the relevant one in the Mexican case. That is that Mexico has an elastic supply of labor, which is the intuitively expected result. In any case, I will present also the results of the wage equation.

17. It is called quota-price system.

18. I couldn't use the proxy that I consider the best one, i.e., the ratio of international to national shadow prices for each sector.