Why Isn't Mexico Rich?

Why isn't Mexico rich? That is both the title and the main question of a recently released and very readable literature review (tip of the hat to Steven Dubner at Freakonomics). The background premise which makes the question interesting is that Mexico has made just about all of the long-term, textbook moves necessary to stimulate growth but has still managed to drag behind peers. Professor and paper author Gordon H Hanson  explores pure economic factors for this, such as credit markets and business structures in the country, but also other factors, including the political footballs of the drug trade, education and emigration. From the abstract:

Over the last three decades, Mexico has aggressively reformed its economy, opening to foreign trade and investment, achieving fiscal discipline, and privatizing state owned enterprises. Despite these efforts, the country’s economic growth has been lackluster, trailing that of many other developing nations. In this paper, I review arguments for why Mexico hasn’t sustained higher rates of economic growth. The most prominent suggest that some combination of poorly functioning credit markets, distortions in the supply of non-traded inputs, and perverse incentives for informality creates a drag on productivity growth. These are factors internal to Mexico. One possible external factor is that the country has the bad luck of exporting goods that China sells, rather than goods that China buys. I assess evidence from recent literature on these arguments and suggest directions for future research.