sábado, 27 de septiembre de 2008

Economic Survey of Mexico 2005: Economic performance and Key challenges
Mexico’s performance has improved, but not by enough

The recovery from the slowdown that started in 2001 seems to be soundly established, with GDP expanding at about its potential rate. The OECD expects that 2006 will mark the third consecutive year that GDP will grow by 4% or more. The recovery was broad-based and both exports and production of non-tradeables are rising briskly with the usual risks related to the evolution of the world economy.. It is significant that neither the slowdown nor the recovery were steep, and that there were no signs of serious instability in either financial or foreign exchange markets. Inflation continues to drift downwards, albeit erratically, towards the Central Bank’s target of 3% with a variability interval of plus or minus 1%. The stability-oriented fiscal and monetary policies put in place after the 1995 peso crisis are thus bearing fruit, and much of the unexpectedly higher oil revenues in the last couple of years have been spent sensibly, or saved. But although a sustained 4% growth rate of GDP seems out of reach for most OECD countries, in the Mexican case it is barely enough to keep per capita living standards rising at the same rate as the OECD average. Convergence towards these much higher living standards would require faster actual growth for many years and hence a rise in potential growth.
Mexico’s challenges and the constraints it faces

Raising potential growth will require some combination of faster growth in the quality of labour inputs, more and better physical capital endowments, better ways of combining inputs of both, and more advanced technology. Achieving some of these can be left to markets, provided that the markets function well. In this respect, the reforms of the past three decades are helping: tariff and quota reductions have put domestic firms under competitive pressure to innovate and cut costs, and the reforms of the financial sector have greatly improved its potential intermediation role. There are other reforms that would have little fiscal cost and could also help.. These include further liberalising the labour market and some product market sectors, notably electricity and other network industries. However, no political party has a majority in Congress, and sub-national governments play an active political role. It has therefore proved extremely difficult to reach agreement on some reforms despite continued efforts by the federal government. These delays are unfortunate and risk discouraging foreigners from investing more heavily in the country. On the other hand, some of the pathways to prosperity have to be both mapped out and financed by the public sector. Primary and (at least) lower secondary education, basic health services, transport infrastructure, a minimal social safety net, and the rule of law, can only be provided for by government. Mexico needs more of all of these, and of better quality. Moving ahead quickly over the medium term on all fronts, rather than a piecemeal approach, would create synergies. But core fiscal resources are too limited for this, and oil-related revenues are too unpredictable. Tax reforms that would help ease the fiscal constraints have become snarled up in the political process. Mexico badly needs a fiscal framework that will allow its development needs to be financed in an adequate, stable and predictable fashion by the different levels of government. In the discussion of these crucial reforms, all parties involved should focus on objective elements rather than on narrow political interests. Comprehensive reforms across all these areas are the only means to ensuring that labour productivity can rise fast enough to close the gap in living standards.

Labour is plentiful but its productivity is low

There is no shortage of labour in Mexico, but its productivity is low. Labour force growth has averaged 2½ per cent over the past 15 years. The Mexican population older than 12 years nearly doubled between 1990 and 2004. Most people enter the labour market in their mid-teens, there is no unemployment insurance and pensions are low; pressures to find work are therefore high. But labour productivity is about a third of the OECD average. Although this opens ample opportunity for catch-up, productivity growth, except in the manufacturing sector, has been mediocre, despite the reform programmes of the past two decades. The evidence suggests that:
Levels of human capital are very low. Educational attainment is not only the lowest among OECD countries as shown by OECD and national surveys but, unlike in most other OECD countries, younger workers have only a little more schooling than the older workers. Adult training is still scarce;
There is large scope to increase productivity by addressing areas where reforms have been timid or lacking to date, including the labour market and some key network industries;
Even when reforms are legislated, implementation can be patchy. The legal system offers many possibilities for long-drawn out appeals, and it can often be circumvented altogether by interference from pressure groups or plain corruption;
The conclusion is therefore that action needs to be taken in several areas both to enhance productivity directly, and to release synergies that will augment the benefits of previous reforms.

Mastering faster growth

Fiscal management has been successful in recent years, and the backdrop of an inflation-targeting monetary policy has helped anchor expectations that macroeconomic stability is here to stay. In addition, the financial sector has gone through an important transformation and a broader and deeper domestic capital market has developed. This will enable the Mexican authorities to turn more of their attention to long-term priorities, which are where the important policy challenges increasingly lie. Faster growth of living standards will require reforms to the tax system so as to finance the appropriate level of current spending and long-term investment needs. Fiscal relations between the different levels of government need to be re-thought so as to ensure a more effective and more equitable use of revenues. Part of higher oil revenues should be earmarked for financing some important multi-year but finite programmes. Major reforms to education, the labour market, the electricity industry, other network sectors and ways of doing business are also desirable, and will help spur investment in Mexico’s future by both domestic and foreign firms. It is important that reforms be assessed and judged by legislators on their intrinsic merits rather than through the prism of short-term political considerations.

viernes, 5 de septiembre de 2008

LORD KEYNES
Keynes published his Treatise on Probability in 1921, a notable contribution to the philosophical and mathematical underpinnings of probability theory, championing the important view that probabilities were no more or less than truth values intermediate between simple truth and falsity. He attacked the deflation policies of the 1920s with A Tract on Monetary Reform in 1923, a trenchant argument that countries should target stability of domestic prices and propose flexible exchange rates. The Treatise on Money (1930) (2 volumes) effectively set out his Wicksellian theory of the credit cycle.
As Keynes recognizes in his magnum opus which was published in 1936, the General Theory of Employment, Interest and Money, his efforts challenged the economic paradigm. In the foreword to the German edition of the General Theory , Keynes states that "the theory of aggregated production, which is the point of the following book, nevertheless can be much easier adapted to the conditions of a totalitarian state (eines totalen Staates) than the theory of production and distribution of a given production put forth under conditions of free competition and a large degree of laissez-faire."
In this book Keynes put forward a theory based upon the notion of aggregate demand to explain variations in the overall level of economic activity, such as were observed in the Great Depression. The total income in a society is defined by the sum of consumption and investment; and in a state of unemployment and unused production capacity, one can only enhance employment and total income by first increasing expenditures for either consumption or investment. The book was indexed by Keynes's student, later the economist David Bensusan-Butt.
The total amount of saving in a society is determined by the total income and thus, the economy could achieve an increase of total saving, even if the interest rates were lowered to increase the expenditures for investment. The book advocated activist economic policy by government to stimulate demand in times of high unemployment, for example by spending on public works. The book is often viewed as the foundation of modern macroeconomics. Historians agree that Keynes influenced U.S. president Roosevelt's New Deal, but disagree as to what extent. Deficit spending of the sort the New Deal began in 1938 had previously been called "pump priming" and had been endorsed by President Herbert Hoover. Few senior economists in the U.S. agreed with Keynes in the 1930s. With time, however, his ideas became more widely accepted.
Sraffa
He was born in Turin, Italy, to a wealthy Jewish family, to Angelo and Irma Sraffa. His father was a Professor in commercial law. He studied in his town and graduated at the local university with a work on inflation in Italy during and after World War I. Notably, his tutor was Luigi Einaudi, one of the most important Italian economists and later a president of the Italian Republic.
From 1921 to 1922 he studied in London at the London School of Economics. In 1922 he was appointed as Director of the provincial labour department in Milan, then as Professor in Political economy first in Perugia, and later in Cagliari, Sardinia. In Turin he had met Antonio Gramsci (the most important leader of Italian Communist Party). They became close friends, partly due to their shared ideological views—Sraffa was at this time a radical Marxist. He also was already in contact with Filippo Turati, perhaps the most important leader of Italian Socialist Party, whom he allegedly met and frequently visited in Rapallo, where his family had a holiday villa.
In 1925 he wrote about returns to scale and perfect competition, underlining some doubtful points of Alfred Marshall's theory of the firm. This work was completed in an article he published the following year.
THE STEADY STATE OF THE MEXICAN ECONOMY
During the last three decades the Mexican economy has experienced a decresing growth rate of capital labour, however, was decreasing more rapidly than the growth rate of capital. Does this mean that the GPD growth rate could be explained by capital better than by labor? Has tachnological change been present during this period? Based on the historical performance of the Mexican economy, it is possible to determine the level of the technological change and to estimate the steady state of the economy. Using the Solow Growth Model, in which we have a Cobb-Douglas production function with technology, this paper provides estimates of technological change and determines tha balance growth path of the economy, a situation in which capital and output grow at a constant rate: the steady state of the economy.
THE MEXICAN FINANCIAL CRISIS OF DECEMBER 1994 AND LESSONS TO BE LEARNED

When the mexican financial crisis ocurred in dicember,1994, there was little information with which to analyze the prospects, but there were many similarities between the adjustment that Mexico went through in conection with the debt crisis of 1982-83. The time paths of crucial variables in the two situations, 1994-95 and 1982-83, has benn studied in order to gain some insight, allowing, of course, for special circumstances that were important on each occasion.
A main finding is that the earlier crisis required a two year adjustment, but current circumstances lead the full model to extrapolated a milder contraction and faster (one year) recovery. These calculations have benn useful interpreting some of the noneconometric aspects of Mexico´sadjustment stances that precipitated the crisis in the firs place.
From: Carlos Ghosn
To: Mr. Louis Schweitzer

Dear Mr. Schweitzer:

I wish you were fine, and so all your business. I was informed about the problem you have with Renault in Japan.

I am writing in order to let you know that I don’t know exactly what to do, because as you already know, I have no experience of working with Japanese people, and I ignore what are their cultural rules, I need to make a lot of changes in order to get great results in your company.

It is important for me to mention that in the case you still having in mind me to apply for that position, I am afraid you need to do some things for me, things such as:
Let me move on with my staff
I was wondering whether you could pay a Japanese Business course, and a cultural one for me and 4 more persons.
I’d really appreciate it if you let me move to Japan with my family, because no one knows how many time I will spend there, so that’s why I need my family there.
Is there any way you could bring me a vocational period once or twice a year?
Do you mind give me a car, so I can move through the country?

Finally, in the case you accept it please let me know in order to start doing the appropriate things for the movement.

I’m looking forward to hearing from you
Yours faithfully

Carlos Ghosn