Armando Razo

When the Law Does Not Matter: The Rise and Decline of the Mexican Oil Industry

Changes in formal institutions do not always affect economic outcomes. When an industry has specific technological features that limit a governments ability to expropriate it, or when the industry is able to call on foreign governments to enforce its de facto property rights, economic agents can easily mitigate changes in formal institutions designed to reduce these property rights. We explore the Mexican oil industry from 1911 to 1929 and demonstrate that informal rather than formal institutions were key, permitting oil companies to coordinate their responses to increases in taxes or the redefinition of their de jure property rights.

The Rate of Growth of Productivity in Mexico, 1850–1933: Evidence from the Cotton Textile Industry

This article employs previously unused data sources and techniques in order to estimate labour productivity and total factor productivity in the Mexican cotton textile industry over the period 1850–1933. Our findings indicate: (1) substantial productivity growth prior to the Porfiriato; (2) rapid productivity growth throughout the Porfiriato; (3) a swift, though incomplete, recovery from the Revolution during the 1920s; and, (4) an insignificant impact on productivity from the Great Depression. We also find evidence that the large, joint stock, limited liability firms that were founded during the Porfiriato had higher levels of total factor productivity than privately owned firms, but only for a short period of time, which suggests that these firms might have been sub-optimally large. Our results also indicate that labour markets in Porfirian Mexico were efficient. This suggests that manufacturers may not have had the monopsony power in labour markets that the literature indicates.

Political Instability and Economic Performance: Evidence from Revolutionary Mexico

What is the relationship between political instability and economic growth? This article examines this question using insights from the new institutional economics applied to a canonical case: revolutionary Mexico. The authors argue that investment and growth during and after the revolution were less affected by political instability than one might predict based on the extant theoretical and empirical literature. They find that while investor expectations, output, and productivity were sensitive to the interdiction of factor and product markets during the years of intense revolutionary violence (1914-17), the periods of political instability before (1910-13) and afterward (1918-34) had relatively minor effects on investor confidence, investments in new plant and equipment, rates of entry and exit by firms, industrial structure, and productivity growth.