Crisis of the export lead growth model;a view from a dependent country.
In the quest for a social policy agenda against the crisis.
Etelberto Ortiz
Universidad Autónoma Metropolitana-Xochimilco
A number of countries have been immerse in a situation of stagnation for quite a while. They started a very difficult turn to “export-lead growth models” that presumably would induce their economies to become manufacturing exporters. Those experiences are significant because involved many countries and a wide variety of policy approaches, with different emphasis and profound incidence into their social conditions. For those countries the shock of the current crisis looks as something in a way familiar, but at the same time a severe questioning of their economic and social model.
The reason is that it is not evident those countries can continue on the same path, as if the present situation is but a small deviation from a long run growth path, defined a la Lucas. In fact that is not true for no one. Every single country, particularly the leading central economies are striving for their lives looking to create the new necessary conditions for their long run survival. The issue is not a short term recovery, but the form in which they can reconstruct the core of their competitive positions.
What is the chance for any dependent economy to find its way, just depending on the market forces? The orthodox speech in a country like Mexico, once one of the “best examples of successful structural reform policies”, is that the recovery will come eventually as a spill-over effect from the recovery in the US. Therefore all is necessary is to guaranty conditions for FDI, as a low inflation rate, openness in the capital account, and fiscal discipline. Last year, in spite of a fiscal policy presumably aimed to restore effective demand, the essential monetary policy stood on a frankly anti-inflationary position, while there was no pressure on the inflation rate. The consequence is that the Mexican economy got the worst impact all over the world, with a drop in GDP of 6.57 %. Nevertheless the government insists on discussing second generation policies for structural reform.
The worst part may not be all that evident, and it is that crisis is no longer just an “economic” issue and has turned into a severe social crisis.
The paper aims to discuss the present actual nature of this crisis in a country characterized as before, and advance a discussion of the actual relevant policy issues. The main policy condition considered is the preeminence of a social policy as the main condition for a way out this crisis.