How many Mexicos are there?

According to McKinsey, there are two! One growing and one stagnating:

 

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The productivity of small firms is falling, while that of large firms is rising. In itself this would not necessarily be terrible, but the size of the large firm sector is not growing much, so around 40% of workers are “stuck” in the falling productivity sector.

Maybe this is just Baumol, and the small firms are all string quartets, but maybe this is a real problem for the country.

Of course, this is just accounting so there’s no guarantee that if the share of workers in the more productive sector doubled, that productivity in that sector would continue to be high. That is to say, there may be a “supply of qualified workers” constraint operating in the country.

How many Mexicos do you think there are?

 

 

2 thoughts on “How many Mexicos are there?

  1. Is there a third Mexico, the one in the US? If you were born in Mexico, and wanted to start a business, what would you do? Start it in Mexico, or go to the US and start the business in the US?

  2. The firm size difference screams corruption and financing issues to me. If you’re a bigger firm, you’ve got larger retained earnings and (probably) better political connections, as well as the revenues to absorb some of the transaction costs involved in corruption and other issues.

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