Marx-Biased Technical Change and International Profit-Rate Convergence: The Case of Mexican Manufacturing

The article studies the fall in the output/capital (OC) ratio in Mexican manufacturing, contrasting the hypotheses of high labor costs versus convergence toward the United States as drivers of Marx-biased technical change. While econometric estimations reject the labor-cost hypothesis—as do the evidence from wage-profit curves—they support the convergence one, showing in addition that convergence increased with the degree of US-Mexican industrial integration. Downward OC convergence, moreover, led to downward convergence in profit rates. Convergence aside, capital accumulation itself pushed the OC ratio down, confirming a tendency of accumulation to depress the profit rate. The estimations—for the change in the profit rate and the OC ratio—rely on a comprehensive annual panel of 17 Mexican manufacturing industries over the period 1992–2019. JEL Classification: C23, F15, F63, O14, O33