Non-canonical Dutch disease in Mexico: Two episodes under contrasting development agendas (1988-1994 and 2018-2025)

Abstract

This article examines two non-canonical episodes of Dutch disease in Mexico (1988-1994 and 2018-2025), demonstrating that sustained real exchange rate appreciation and manufacturing debilitation can arise absent commodity-driven terms of trade improvements. The first episode originated in exchange rate mismanagement under the Pacto de Solidaridad Económica; the second, in financially mediated carry trade dynamics amid elevated interest rate differentials. Drawing on structuralist and new-developmentalist frameworks, we show that both episodes engendered deindustrialization symptoms, stagnant domestic manufacturing output despite resilient exports, transmitted through financial rather than commercial channels, thereby tightening the balance-of-payments constraint on long-term growth.

JEL Classification: F31; F41; L60; O11; O14.