How many Mexicos are there?

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




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?



Kidnapping in Mexico: no longer just for the rich and famous

Business Insider has an article called “Even The 99 Percent Get Kidnapped In Mexico.”  Apparently, the kidnapping trend has reached the middle class.  Here are some of the depressing details:

1.”Shopkeepers and family physicians, carpenters and taxi drivers: All have been targeted in recent years as minions of young criminals enter a trade long run by guerrillas and gangland bosses.

2. Ransom demands here in Morelos, a small state just south of the capital Mexico City that by some counts tops the nation in kidnappings, have ranged from $13,000 to as low as $250, according to the state police. 

3. Analysts say as few as 1 in 5 abductions are ever reported, in part because victims’ families fear police agents are involved with the gangs.

4. Investigations and ransom negotiations frequently become complicated because victims are targeted by family members and acquaintances. Victims in such cases often are killed because they can identify their captors.”

The governor of Morelos, Señor Ramirez, made an interesting political choice when deciding to answer critics who say that he has “failed miserably, either from stupidity of complicity.”  He notes that he inherited the kidnapping problem from previous administrations.  Ok, I can see that argument, although he did take over 18 months ago on a campaign to target lawlessness, specifically kidnapping.  Sadly for him, he goes on to argue that there is an “outsize public “psychosis” about “kidnapping, kidnapping, kidnapping, kidnapping.”  Hmm, I’m not a public relations expert, but I doubt that will quiet the critics.


How to Get Filthy Rich in Rising Mexico: A Primer

Two new scandals have shocked Mexicans in recent weeks, no mean feat in a country that has known its fair share of corruption. If only political corruption were a medal event in the Olympics…

First, the leader of the PRI in Mexico City was charged with pimping.  seriously!  He stands “accused of hiring women for sex and putting them on the party payroll.”

Second, a secretly recorded conversation shows that Mexican congresspeople are routinely using federal money as a way to blackmail mayors.  According to the article, the Congress has been relatively untouched by corruption scandals, at least compared to other institutions.  This might be just an issue of transparency though.  I thought it was funny that Barbara Botello, mayor of Leon and head of the Mexican association of mayors, reacted in this way:  “It’s unprecedented for something like this to come out into the open.”  Not that it’s unprecedented for something like this to happen, just for it to be publicly known.  Nice.

The whole thing unfolded when the mayor of Celaya informed his staff that “congressmen were requiring him to inflate a paving contract by 35 percent in exchange for $12.2 million in federal public works money…[and]…they demanded he go with the contractor of their choice.”  One of his staff recorded the talk and then leaked it to Reforma, one of the largest newspapers in Mexico.

From the mayors that have come forward so far, it’s alleged that “senators and congressmen routinely skim off the top of federal funds they allot to cities, money that can add up to three-quarters of the budget for local jurisdictions.”  Hence the “filthy rich” in the title of this post.

Botello goes on to say that many more mayors have faced this pressure/extortion, but are afraid to come forward.  She notes “Many are afraid of reprisals, of their federal funding going down.”





(F)re(e)-Basers Lament

First Ghana re-benchmarked their GDP and made a huge leap. Now Nigeria has done the same and made an even bigger leap.

But Ghana does not appear to be happy about being on-upped by their now even larger neighbor as its president has stated that Ghana is “bullying” the rest of West Africa:

Ghana’s President says Nigeria’s tall list of trade prohibitions has stunted regional trade and by extension, frustrated economic integration in the sub region.

John Mahama told an audience of the Africa Summit at the London School of Economics that he found it befuddling that Africa’s most populous country is not respecting the Trade Liberalisation Scheme of the Economic Community of West African States.

Already seen as an economic giant in Africa, the country just became the Continent’s biggest economic hub after a rebasing exercise which resulted in the oil-rich West African country nudging off South Africa from the top.

Its GDP for 2013 totalled 80.3 trillion naira (£307.6bn: $509.9bn). That compares with South Africa’s GDP of $370.3bn at the end of 2013.

Its GDP now includes previously uncounted industries like telecoms, information technology, music, online sales, airlines, and film production.

Mr Mahama says Nigeria’s protectionist measures do not bode well for regional trade and integration, adding that the country has more responsibility to foster the integration agenda since it wields tremendous economic power in the sub region.

“I believe that Nigeria has a certain kind of responsibility in West Africa, because it is the largest economy and the most populous country.”

The Ghanaian President added that: “Nigeria has nothing to fear from Ghana in terms of competition. Nigeria has nothing to fear from Cote D’lvoire in terms of competition. Nigeria has nothing to fear from Benin or Togo or Niger in terms of competition and yet year in, year out, there is a prohibition list,” he bewailed.

Mahama believes Nigeria must fritter off any such fears harboured since the country’s actions, based on such fears, are hurting the entire region.

“I think it is a certain misconception and a certain not really tangible fear that if the market is open it will bring competition and make some people lose out in the Nigerian market,” he observed.

He wondered why Nigeria prohibits textiles and processed goods from Ghana even though his country has products that have registered under the ETLS and signed the protocol on the ECOWAS Trade Liberalisation.


No word yet if Ghana will re-rebase their GDP to counter Nigera’s re-basing.


Immigrating, it’s harder than you think

or at least harder than these yahoos think.

7 members of Italy’s anti-immigration party the Northern League tried to demonstrate how easy it is for illegal immigrants to cross from Tunisia to Italy.  It apparently wasn’t so easy for these fearless sailors though.  They set out on a “rubber dinghy,” proudly flying the party flag, until the engine caught fire and they needed to seek help.

The best part though is when they launched a distress signal backwards, shooting a hole into the boat and dumping them all into the ocean.  Hard to script a better ending than that.

According to HuffPo, “The seven have been roundly mocked in Italian and Maltese media. According to one Maltese paper, “they actually proved that it is easy for sea trips of this sort to end in tragedy – and in Malta, where neither they nor asylum seekers want to land.”

update: the Northern League says they have never heard of said yahoos and disavows involvement, but of course they would say that after such a debacle, so who knows…

h/t Justin Sandefur

“The Theft of the Century”

The Mexican government wisely decided that before the educational system in Mexico could be fixed, they first needed to figure out what they were dealing with.  For that reason, EPN ordered the first ever Census of Schools, Teachers and Students of Basic and Special Education (basic meaning primary and middle schools).

The results show the magnitude of the problem.  Here are some key findings:

1. “39,222 people supposedly assigned to a school in which no one actually knows them (“aviators”)

2. 30,695 people who claim to be teachers, but who in reality work for the SNTE [National Union of Education Workers] or the CNTE [National Coordinating Committee of Education Workers—a dissident teachers group];

3. 113,259 people who claim to be in a school, but who are located “in another place of work” (fugitives)

4. 114,998 people who receive pay as active teachers, but who do it in the name of people who have already retired or passed away.”

And this is a gross underestimate, since the states with “the with the most corrupt and backwards systems (Oaxaca, Chiapas, and Guerrero), refused to participate and were not included in the census.” Yikes.

Here’s a nice figure from the Economist on the issue:


and a great summary of the sad situation:

“The first ever government census of schools in Mexico shows that 13% of all people registered on the schools’ payrolls do not turn up to work (see chart). That is 298,000 out of a total of 2.25m, divided among those who receive a paycheck but appear to be figments of someone’s imagination; who work somewhere else; who are on leave (often as union representatives); or who have quit, retired or died. Organisations that represent outraged parents call it the “theft of the century.””


“Hecho en Socialismo”

In Venezuela, there are government-run grocery stores that take a page from Thomas Aquinas and sell their products at a “just price” (precio justo):


Now the government has innovated and is selling propaganda products in their stores:


This is a bag of rice. “Guarimbas” are barricades used in protests and “paracos” are paramilitary organizations.

Note that the protester getting kicked has claws and a tail (i.e. is depicted as a rat).

Note also in the heart on the lower right it says “Hecho en Socialismo”. Made in Socialism.

It’s actually more likely the product was made in Guyana!

Hat tip to Boz.


The Long Shadow of Spanish Colonialism

William Maloney has a new paper with Felipe Valencia Caicedo called “Engineers, Innovative Capacity and Development in the Americas.”  I’ve been a fan of Maloney’s work since I read “Missed Opportunities: Innovation and Resource Based Growth in Latin America” in Economía in 2002.  (Wait, didn’t I show something similar in 1997?  Maybe the “fan” feeling doesn’t run both directions!)

Here’s the abstract of the new working paper:

Using newly collected national and sub-national data, and historical case studies, this paper argues that differences in innovative capacity, captured by the density of engineers at the dawn of the Second Industrial Revolution, are important to explaining present income differences, and, in particular, the poor performance of Latin America relative to North America. This remains the case after controlling for literacy, other higher order human capital, such as lawyers, as well as demand side elements that might be confounded with engineering. The analysis then finds that agglomeration, certain geographical fundamentals, and extractive institutions such as slavery affect innovative capacity. However, a large effect associated with being a Spanish colony remains suggesting important inherited factors.




That’s so Bobby (Mugabe)

Bobby Mugabe has struck again!  There isn’t anything shiny and successful that Mugabe doesn’t want to grab control of and drive into the ground.  Apparently, there is a fashion label called the House of Gushungo that manufactures “t-shirts, umbrellas, berets, and other sportswear featuring the leader’s “R G Mugabe” signature. It also manufactures a “1924” line—signifying the year of Mugabe’s birth, with products that were released in time for the president’s 89th birthday celebrations last month.”

The company was set up with Mugabe’s ok and was created “to propel [Mugabe’s] identity, to maintain his legacy.” I’m not sure what it means to propel an identity, but I do have a good idea of what Mugabe’s legacy is going to be, and it isn’t fashion-related.

In an awesomely ironic move, Mugabe is showing exactly what his legacy will be as he tries to wrestle control of the company now that it has become successful (I really hope people are wearing this clothing ironically).

Here’s a nice description of the dispute:

Matenda claims that Mugabe gave the brand his blessing when it was established in 2010, with no intention of reaping a profit from it. “The president does not want to make money,” he told an African correspondent. He explained that the brand’s informal agreement with Mugabe stipulated that the company donate to humanitarian causes once it turned a profit.” [Blogger note: LOL]

and the party’s response:

“It’s an intellectual property which we have to maintain,” a Zanu-PF spokesman told BBC. “We have allowed every Jack and Jill to do what they like about the whole thing. We want to control it to make sure whoever is going to use it will have to pay something. So we are going to restrict it as a party.” [Blogger note: that is certainly their comparative advantage].

I haven’t been able to figure out what has happened since 2013 about the dispute, although I did discover that the marketing director for the company has since been killed in a car accident.  Am I paranoid to immediately think of ZANU?

Here are some tremendous pictures of Mugabe and his wife dressing in matching clothing, embellished with photos of a young Mugabe on them.  The last photo is of a woman dressed similarly but in a way that has to be ironic (I hope).








What progress looks like (Latin American Edition)

This photo claiming to compare the presidents of Argentina, Chile & Brazil today with those in the 1970s  is making the rounds on Twitter:



While the exact picture is false (the three stooges in the bottom panel are the military junta that governed Chile before Pinochet broke up the band to go solo), the idea is exactly correct.

In the mid-70s, all three countries were “led” by Military dictatorships, though in Brazil, the President was chosen by the military and then “approved” by the Legislature. And now the three countries are led by women who won reasonably free and fair elections.

Here are pics of the actual dudes who were military dictators as of 1976 in the three countries (some are taken post-dictatorship):