After England began what came to be known as the First Industrial Revolution at the end of the eighteenth century, industrial technology quickly diffused throughout the nations of the North Atlantic. Within fifty years of the first rumblings of British industrialisation, the factory system had spread to Western Europe and the United States. Latin America, however, lagged behind. It was not until the twentieth century that manufacturing came to lead the economies of Latin America and that agrarian societies were transformed into industrial societies.
This article seeks to understand this long lag in Latin American industrialisation through an analysis of the experience of Mexico during the period 1830–1940. The purpose of the paper is to look at the obstacles that prevented self-sustaining industrialisation from taking place in Mexico, as well as to assess the results of the industrialisation that did occur.
The basic argument advanced is that two different types of constraints prevailed during different periods of Mexico's industrialisation. During the period from 1830 to 1880 the obstacles to industrialisation were largely external to firms: insecure property rights, low per capita income growth resulting from pre-capitalist agricultural organisation, and the lack of a national market (caused by inefficient transport, banditry and internal tariffs) all served as a brake on Mexico's industrial development. During the period 1880–1910 the obstacles to industrialisation were largely internal to firms. These factors included the inability to realise scale economies, high fixed capital costs and low labour productivity. During the period from 1910 to 1930 these internal constraints combined with new external constraints – including the Revolution of 1910–17, the political uncertainty of the post-revolutionary period and the onset of the Great Depression – which further slowed the rate of industrial growth.