Economies of Exclusion: Underclass Poverty and Labor Market Change in Mexico

Economies of Exclusion: Underclass Poverty and Labor Market Change in Mexico

Momayezi, Nasser

Sernau, Scott. Economies of Exclusion: Underclass Poverty and Labor Market Change in Mexico. Westport, CT: Praeger, 1994. 156 pp.

Although optimists have argued that the Mexican economy is back on track and that overhaul of the political system has begun, the country is not poised for rapid economic growth. Per capital income is, in constant dollars, lower today than in 1980. The country is divided between a middle class with expanding options and, at the same time, an underclass facing diminishing options and exclusion from much of the productive life of the society.

In this short work (156 page of text), Sernau who teaches social stratification and international development at Indiana University, South Bend, has done a service to those with a budding interest in the economic development in Mexico. In nine chapters, the author has condensed into a readable style the present economic situation of Mexico. The volume is a modest but thorough analysis of the major causes for the emergence of underclass in the Mexican society. The author begins with development of a theory of an underclass emergence and then presents a model that focuses on the interaction of individual characteristics and economic structures in the creation of a labor market. Sernau notes that the Mexican economy has undergone four decades of profound change based on a tertiary economy built on services and information technology. Although many of these changes have made the Mexican economy and society better able to meet some of the many demands for basic needs, entrance into full participation in that economy and society have become more restrictive. These rapid changes with its complex equipment operations and required standardized credentials have excluded a large number of rural and small town people, whom Sernau labels “underclass,” from permanent entrance into the labor market.

Sernau uses “underclass” to refer to the “urban poor” and that includes those in “small cities as well as in various communities around the urban perimeter whose economic life is tied to city.” The author believes “the common element is underemployment and weak formal labor force attachment” (p. 15). Sernau argues that in spite of improvement in human capital, physical structure, and economic diversification, the Mexican economy is profoundly troubled. Per capital GDP and discretionary income declined over the course of the last decades, while inflation soared and the foreign debt became monumental. “A smaller percentage of the population was employed in manufacturing in 1980 than in 1930, and the figure may be declining towards the level seen in 1920, immediately following the revolution in Mexico” (p. 46). Like much of Latin America, Mexico has yet to fully recover from the devastating recession of the 1980s. Sernau’s detailed examination of Mexican economy seems to indicate that Mexico is experiencing a phenomenon that could be termed “development without growth.”

Sernau asserts that Mexico is facing a crisis of rural stagnation. Many smaller cities and rural towns are abandoned by job seekers in favor of the large cities. The country is divided between an industrial north and a rural, traditional poor south and the gap between them is widening. The heavy industry and manufacturing of durable goods are being replaced by rapid expansion of specialized export assembly plants (maquiladoras). In fact maquiladoras along the United States-Mexico border have shown explosive growth since their inception in 1965. However, much of the operation of maquiladoras remains in the U.S., especially technical, clerical and administrative aspects, while still taking full advantage of the much lower wages in Mexico. The pattern of employment in maquiladoras precludes acquiring skills and benefits, and credential associated with upward mobility. Jobs in maquiladoras are not likely to lower the overall rate of employment, especially for males. The author is pessimistic about the prospect of Mexico becoming the world’s next “industrial dragon.”

The author claims that while the industry has shown net decline in growth since the early 1970s, the service industry has absorbed the majority of those who are no longer employed by agriculture. One area of the Mexican economy that has been extensively planned and forcefully implemented is tourism. FONATUR, the federal government’s tourism office, has planned and developed entire cities in areas that were previously claimed only by the jungle. Moreover, FONATUR has extensively reshaped the face of other cities. However, tourism in Mexico provides temporary employment options for most workers, offering accessibility for those with the right combination of age, gender, skill, but mobility.

In the last chapter, the author concludes that the economic changes associated with the growth of a tertiary economy have benefitted small segment of the work force but excluded a large number of people from consistent formal participation. The modernization of the economy cannot help but increase the marginalization of the subsistence farmer. What is to happen to these displaced farmers? The only resource for many will be increased migration. These are the people who are stalled on the periphery of the economy, socially isolated and excluded.

Sernau’s account of Mexican economy and society is interesting. Much is packed into this book and it will be extremely useful not just for economists, but to scholars interested in Third World economic development. His use of the sources is quite satisfactory. By providing statistics, whenever necessary, he helps the reader comprehend the dimensions of the Mexican crisis. Utilizing a very lucid writing style, Sernau provides readers with a great deal of detail. The book is an important contribution to the literature on the topic. It should be available to students as well as general public, especially to readers who want a better appreciation of the Mexican economy and society. Nasser Momayezi Texas A&M International University

Copyright Association of Third World Studies, Inc. Fall 1999

Provided by ProQuest Information and Learning Company. All rights Reserved