Economics & Finance / Macroeconomics / Economic Growth & GDP

Why Mexico Boomed Then Stalled: The 1950-2010 Economic Mystery

Timothy J. Kehoe; Felipe Meza

Mexico was once the poster child for economic growth, averaging 6.5% annual GDP growth from 1950 to 1981. Then it hit a wall. This video, based on the research of Timothy J. Kehoe and Felipe Meza, dives into the puzzling story of Mexico's catch-up growth and its sudden stagnation. We break down the key periods: the import-substitution boom, the 1982 debt crisis, the NAFTA reforms, and the slow growth that followed. The real culprit? Total Factor Productivity (TFP) stalled. Discover the four core barriers—inefficient finance, weak contract enforcement, rigid labor markets, and monopolies—that kept Mexico from closing the gap with the U.S. Plus, a shocking comparison with China's current trajectory. If you want to understand why some economies soar and then crash, this is for you.