Policies for Industrial Learning in China and Mexico

In this paper a comparative analysis of the role of government policies in industrial learning and the development of capabilities of indigenous firms in Mexico and China in order to shed light on why China is outperforming Mexico. Paper finds that Mexico and China have had starkly different approaches to economic reform in this area. Mexico’s approach to reform has been followed a “neo-liberal” path, whereas China’s approach could be described as “neo-developmental.” Mexico’s hands-off approach to learning has resulted in a lack of development of endogenous capacity of domestic firms, little transfer of technology, negligible progress in the upgrading of industrial production, and little increase in value added of exports. By contrast, China has deployed a hands-on approach of targeting and nurturing domestic firms through a gradual and trial and error led set of government policies.