MEXICO HAS THE POTENTIAL FOR A MORE equitable and beneficial type of economic growth. Economist Ren6 Villareal, for example, has recently argued that "the most viable Mexican industrialization strategy in- volves (1) an expansion of manufacturing exports and (2) endogenous industrial growth centering on basic goods and inputs. In turn, this external orientation should be supported by (3) a process of selective import-substitution industrial- ization in which links in the productive chain are created that promote intra-industrial and inter-sectoral articulation, and competitive and efficient production."' Such a strategy draws upon the experience of the Southeast Asian "tigers": South Korea, Taiwan, Singapore and Hong Kong. Indeed, some lessons can be learned from these tigers since every facet of the new Mexican industrialization strat- egy differs markedly from their export-led success. South Korea, for example, never adopted indiscriminate economic liberalization, but rather a mix of active export promotion and efficient import substitution. Moreover, industrialization was preceded by a massive redistribution of wealth and income through land reform. These reforms increased employment and reduced poverty in the countryside, slowing emigration to the cities. A more equitable distribution of income created the foundation for an expanding domestic market, so that growth was both outward- and inward-oriented. Strong state intervention in South Korea had a key role in turning private-sector activities into a coherent industrializa- tion strategy. An efficient state bureaucracy had the institu- tional capacity and independence to run such a strategy. Foreign and domestic private investment was directed and controlled to avoid the creation of "enclave" economies. Export-processing zones quickly became a source of forward and backward linkages-forward through rising real wages that created demand for other industrial and agricultural goods; backward by encouraging the use of intermediate inputs made by domestic industry. 2 Unfortunately, NAFTA conditionality precludes Mexico from engaging in these types of policies. Mexico must first free itself from such external constraints before it can engage in a different type of developmental policy. 1. Ren6 Villareal, "The Latin American Strategy of Import Substitution: Failure or Paradigm For the Region?" in Gary Gereffi and Donald L. Wyman, eds., Manufacturing Miracles: Paths of Industrialization in Latin America and East Asia (Princeton: Princeton University Press, 1990), p. 316. 2.These issues are discussed at length in different chapters of Gereffi and Wyman, Manufacturing Miracles.
