Trade, development, and structural change: the future of Mexico's henequen industry

Abstract

Henequen has traditionally been one of Mexico's major export crops and an important source of the foreign exchange needed for growth and development. Also, the henequen industry is the key element in the domestic economy of Yucatan. Raw fiber and finished product prices have declined since 1963 along with volume of sales, primarily as a result of substitution of synthetic fibers in most hard fiber end uses. Instability in the henequen fiber and finished products markets, together with internal Mexican complications, disrupted all sectors (producers and processors) of the industry. The Mexican government nationalized the processing sector of the henequen industry in 1963, and subsequently has undertaken a program of investment, rebuilding, and modernizing. The government thus incurred special risks with high fixed costs in an industry whose future success depends upon foreign buyers of henequen products and which faces increasingly unfavorable terms of trade. Thus, in the final analysis, the success of the industry depends upon substitutability and the demand for final products in foreign markets. This study describes the structure of the world hard fiber industry and markets; the factors that lead to the decline of hard fiber markets; the past and present structure of the henequen industry, and how this structure relates to markets for henequen fiber and products. The determinants of the demand for henequen fiber and products are examined and the results of statistical analysis are presented. Background data and information about the world hard fiber market, together with specific information about the Mexican henequen industry and the market for henequen fiber and products are presented in various sections of this study. ...