Why has an economy that has done so many things right failed to grow fast? Under-Rewarded Efforts traces Mexico’s disappointing growth to flawed microeconomic policies that have suppressed productivity growth and nullified the expected benefits of the country’s reform efforts. Fast growth will not occur doing more of the same or focusing on issues that may be key bottlenecks to productivity growth elsewhere, but not in Mexico. It will only result from inclusive institutions that effectively protect workers against risks, redistribute towards those in need, and simultaneously align entrepreneurs’ and workers’ incentives to raise productivity. For this transformation to take place, substantive changes to the country’s tax, labor, and social insurance regimes are required.
Santiago Levy, nonresident senior fellow in the Global Economy and Development program at Brookings, published this book with the Inter-American Development Bank.