Volume 44, Number 173,
April-June 2013
From Recession to Recovery:
Production and Employment in Mexico and The State Of Mexico
Pablo Mejía, Sandra Ochoa and Miguel Ángel Díaz
Effects on National and State Production ( ...continuation )

The vertical axis of this figure measures the evolution of cumulative percentage growth of these variables, with respect to the value reached at the peak prior to the Great Recession (which can be associated with different dates as shown in table 1), while the horizontal axis shows the number of periods subsequent to the date of the peak. In this sense, the period zero corresponds to the mentioned peak. Specifically, panel (a) shows cumulative gdp growth for both countries. Many of the previously described features can be seen in these figures.18 For example, it is clear that the recession in Mexico was deeper and longer than in the us: the minimum values of cumulative growth correspond to the end of the recession and mark the beginning of the next period of expansion. Mexican gdp effectively fell over four quarters, until reaching 8.5% below its maximum level (peak), while us gdp fell throughout three quarters, reaching 3.1% below the peak. It is important to note that the Figure shows that production losses linked to the us recession were recovered 7 quarters after the beginning, in such a way that by the fourth quarter of 2010 (9 quarters after the peak), levels had reached 2.7% above the previous peak. On the contrary, in the same period (following 11 quarters), Mexico’s gdp was 0.1% below its highest level prior to the recession (also see Table 1).19

Similarly, panel (b) presents information related to manufacturing production in the two countries and the State of Mexico. One aspect that arises from this data is that the recession had key sector differences. Specifically, as mentioned above, the Mexican manufacturing recession was shorter but deeper than in the us, while in the State of Mexico, it was slightly shorter and less severe than on the national level. Recovery has been fairly acceptable, although insufficient to reverse the productive losses in Mexico. By December 2010, levels were still 5.5% below the peak prior to the recession. It is interesting to note that recovery of us manufacturing was unable to reverse the losses linked to the recession by December 2010, as levels remained far below the pre-recession peak (-8.6%). This behavior thus suggests that recovery has mainly been based on greater dynamism in the services sector. Finally, State of Mexico manufacturing is the only place where levels were above the pre-recession value, by 4.4% in December 2010 (32 months following the peak). In fact, the State of Mexico was able to compensate for the losses in production brought about by the recession 29 months later.

The following sections will analyze figures by sector for production and employment on the national and state level.

Effects on Production and Employment: Evidence by Sector

In order to analyze the effects on production and employment in Mexico and the State of Mexico, the itaee and total and sector employment were used, as was done for the gdp and manufacturing production. The results are given in Tables 2 and 3 and Figures 2 and 3.

The turning points in Table 2 show that the specific recessions in productive sectors on the national and state level began in the second half of 2008, with greater synchronization with the us gdp cycle,20 while recovery began in the second half of 2009, with a one quarter difference regarding the turning points shown in Table 1 for gdp. The drop in production during this phase fell to a minimum of 7.7 (tertiary sector of the State of Mexico) and a maximum of 9.4 (total State of Mexico). Still, in the latter case, the length of the recession was only half (2 quarters) of the national counterpart. These differences can be explained by tertiary sector performance (representing over 60% of production in both cases), which saw a small magnitude drop (-7.7% versus -8.5%) throughout a shorter time period than the State of Mexico (3 quarters). Recession in the secondary sector saw similar performance in both cases, both in terms of magnitude and length. Recovery has provided strong momentum and cumulative growth rates with respect to the value of the valley that defines its start, from at least 9.8% in the national secondary sector and a maximum rate of 19.1% in the State of Mexico secondary sector (see Table 2).

18 Because this is the first figure of its kind, its features are described in detail. For future figures, the presentation will be less detailed, only describing the key implications.

19 It is important to clarify that growth during expansion and decline in the recession are not directly comparable, because the values by which they are measured are different. The value of the peak is obviously greater than that of the following valley.

20 Note that the turning points and magnitude of the national recession are different when measured with gdp and national itaee.

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PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 194 July-September 2018 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
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