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
WHAT EXPLAINS THE EFFECTS OF PRODUCTION AND EMPLOYMENT? ( ...continuation )

Finally, during the recent economic crisis, remittances fell both in the country and state. In fact, both cases presented peaks and valleys on similar dates (third quarter of 2007 and third quarter of 2009, respectively), between which remittances for Mexico and The State of Mexico accumulated a loss of 30.6% and 25.5%, respectively, as shown in Figure 6 and Table 4. Although this may just be preliminary evidence, these results are different from those presented by Vargas (2008) and Durdu and Sayan (2008), who validate the moderation hypothesis. The explanation for these differences may be due to the growing synchronization of cycles between Mexico and the us, in such a way that remittances have become pro-cyclical, at least in the recent recession, and have contributed to deepening the recession.27

It is important to emphasize that despite the fact that the world economy, and especially the us economy, has seen significant recovery of economic activity, Mexican income through remittances has grown by 10.4% and 5% with respect to the valley point in Mexico and The State of Mexico, respectively, which has been insufficient to recover pre-crisis levels. Figure 6 shows that thirteen quarters after the start of the recession, country remittances were a little more than 20% below their pre-crisis value, while those for the State of Mexico were 30% below that level.28

Figure 5. Cumulative Percentage Growth of fdi in Mexico and The State of Mexico during the Current Cycle
Source: Prepared by the authors based on data from the Ministry of Economy (fdi) and the Bank of Mexico (Rem).




Figure 6. Cumulative Percentage Growth of Remittances in Mexico and The State of Mexico during the Current Cycle
Source: Prepared by the authors based on data from the Ministry of Economy (fdi) and the Bank of Mexico (Rem).

27 The decreased growth rate for remittances began before the recession as a result of the strengthening of us immigration policies due to the September 11, 2001 terrorist attacks. Starting in 2004, there was a series of stricter measures to criminalize undocumented status, accelerate deportations, punish anyone providing help to undocumented persons, increase troops along the border, build new prisons for undocumented immigrants and build a wall along the border, among other measures (see Alden, 2012).

28 However, just like for fdi, the available figures suggest a possible slight effect on the economy as a whole in the framework of the current cycle. The available statistical information shows that from 2003 to 2010, the ratio of remittances-gdp was only 2.9%, while for the State of Mexico, the figure was 2.7%.

Published in Mexico, 2012-2017 © D.R. Universidad Nacional Autónoma de México (UNAM).
PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 48, Number 191, October-December 2017 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,
CP 04510, México, D.F. Tel (52 55) 56 23 01 05 and (52 55) 56 24 23 39, fax (52 55) 56 23 00 97, www.probdes.iiec.unam.mx, revprode@unam.mx. Journal Editor: Alicia Girón González. Reservation of rights to exclusive use of the title: 04-2012-070613560300-203, ISSN: pending. Person responsible for the latest update of this issue: Minerva García, Circuito Maestro Mario de la Cueva s/n, Ciudad Universitaria, Coyoacán, CP 04510, México D.F., latest update: Nov 13th, 2017.
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