Capital Concentration and Market Power in Mexico's Manufacturing Industry: Has Trade Liberalization Made a Difference?

By Tanski, Janet M.; French, Dan W. | Journal of Economic Issues, September 2001 | Go to article overview

Capital Concentration and Market Power in Mexico's Manufacturing Industry: Has Trade Liberalization Made a Difference?


Tanski, Janet M., French, Dan W., Journal of Economic Issues


"It's very sad ... We don't have a middle class in Mexico. We have the worst distribution of income in the world. We only compare with Africa." [1]

--Vicente Fox, President of Mexico

Mexico has long been known for its unequal distribution of income and wealth. Although several academic studies imply a tendency in the Mexican economy toward increasing concentration of wealth and growing polarization between regions, income groups, manufacturing sectors, and exporting companies vis-a-vis non-exporters (e.g., Morales et al. 1992; Dussel 1997; de la Garza Toledo 1998; Marichal 1997; Cruz Serrano 1991), few studies carry out an in-depth analysis of concentration of capital in Mexico. [2] Such studies could provide insight into the underlying causes of increasing income and wealth inequalities in Mexico and elsewhere. In this paper, we attempt to further contribute to the research on this topic by presenting (a) a detailed analysis of different measures of concentration and market power in Mexico's manufacturing industry and (b) an analysis of the role that trade liberalization might play with respect to the industrial and market structure of Mexico.

The first section of the paper reviews the relevant orthodox and institutionalist literature on the topic of industrial concentration. The second section analyzes concentration ratios in different Mexican manufacturing sectors and their comportment between 1970 and 1993. The third section of the paper analyzes the role of trade liberalization with respect to concentration levels. The fourth section analyzes the limitations of using the concentration ratios and offers alternative methods. These alternatives include a presentation of concentration of sales of the top conglomerates as a percentage of total gross domestic product (GDP), concentration of exports among top companies, the percentage participation of the largest 25 companies in the sales of the largest 500, the percentage ownership of equity of the largest 500 companies in Mexico, and the effects of privatization on the manufacturing as well as the banking sectors in Mexico. The fifth and sixth sections look at the role of the process of privatizatio n in increasing capital concentration and the effect of mergers between Mexico's industrial magnates and institutions in Mexico's financial services sector. The last section looks at data on the real wages and benefits of workers in the manufacturing sector. Overall, the data in the paper suggest that trade liberalization, combined with other policies of structural adjustment and the structure of the international economy itself, have led to greater, not lesser, concentration of economic power in Mexico. Finally, the paper summarizes the findings and addresses the particular reasons why this situation is problematic for economic development in Mexico.

Market Power and Economic Theory

Concentration of capital and market power has been of concern to neoclassical as well as to institutionalist economists but for different reasons. Orthodox economics assumes that economic decisions concerning what is produced, how it is distributed, and how much income is received by individuals are, or should be, principally determined by impersonal market forces, that is, by supply and demand determinants within a social framework where no individual or organization commands excessive coercive power and where the individual consumer is sovereign (cf. Harberger 1971; Willig 1976; Hausman 1981; Scitovsky 1962.). Economists working within the mainstream paradigm have paid little attention to the concepts of social and economic power and their ramifications for the discipline since imperfections in the market are usually considered somewhat "rare." If they do exist, they are only temporary while the market adjusts and other firms take advantage of market incentives to enter monopoly or oligopoly markets as addi tional suppliers (Baumol, Panzar, and Willig 1982). …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Capital Concentration and Market Power in Mexico's Manufacturing Industry: Has Trade Liberalization Made a Difference?
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.