The Effect of the Exchange Rates on Investment in Mexican Manufacturing Industry

This paper, considering revenue and cost exposure channels, investigates the effects of exchange rate behaviour on fixed capital investment in Mexican manufacturing sector over 1994-2002. We find that i) currency depreciation has a positive (negative) effect on fixed investment through the export (import) channel; ii) exchange rate volatility impacts mostly export oriented sectors ; iii) the sensitivity of investment to exchange rate movements is stronger in non-durable goods sectors and industries with low mark-up ratios.Exchange rate volatility ; investment ; external exposure ; market structure

Towards a developmental state? Provincial economic policy in South Africa

This paper explores the meaning of the developmental state for spatial economic policy in South Africa. Two main questions are addressed: do provincial governments have a role to play in promoting economic prosperity, and to what extent do current provincial policies possess the attributes of a developmental state? These attributes are defined as the ability to plan longer term, to focus key partners on a common agenda, and to mobilise state resources to build productive capabilities. The paper argues that the developmental state must harness the power of government at every level to ensure that each part of the country develops to its potential. However, current provincial capacity is uneven, and weakest where support is needed most. Many provinces seem to have partial strategies and lack the wherewithal for sustained implementation. Coordination across government appears to be poor. The paper concludes by suggesting ways provincial policies could be strengthened