Premature deindustrialization in Latin America: Comparative analysis of Argentina, Brazil, and Mexico

Premature deindustrialization is a critical challenge for developing countries, particularly in Latin America, where manufacturing employment lags behind that of earlier industrialized nations. This study examines the different experiences of Argentina, Brazil, and Mexico, shedding light on the different trajectories of deindustrialization within these countries. We use a multiregional subsystem approach to examine whether the observed decline in manufacturing within these economies represents premature deindustrialization. Argentina’s manufacturing subsystem shows a clear shift toward low-tech employment, with an increasing dominance of low- and medium-low-tech industries, undermining the potential for higher-value-added manufacturing. Brazil, on the other hand, faces the most severe deindustrialization, characterized by a growing reliance on low-tech manufacturing and low-knowledge-intensive services, exacerbating its economic challenges. While Mexico has avoided the worst effects of premature deindustrialization, it still faces problems related to productivity differentials across sectors, suggesting that even high-tech industries may be shifting to lower-value tasks.