Main determinants and alternatives of public policy in the face of current changes in North American policies in the context of neo-protectionism

Abstract

Currently, the main adverse determinants of market economies worldwide are due to the neo-liberal economic policy applied to the last years of the seventies, especially to emerging economies. Thispolicy works through the free flow of capital, commercial and financial deregulation, as well as the reduction of the state's participation in the economy. One of the variables that are influencing the real situation in Mexico is the reduction in the economic price in 2016 and 2017 has been the reduction in the price of oil, which is explained by the increase in the global supply of hydrocarbons as well as the slowdown in China and current changes in North American politics in a context of Neoprotectionism. In this sense, when development disappears, it is convenient that State and market cease to be exclusive to become complementary. In Mexico, with a selective industrial policy and a solid business commitment, growth can be resumed, as well as tackling social issues often relegated by the rules of globalization. As we are in the transition to a new economic policy regime of a universal nature that can lead to a disorder before offering its full benefits. Faced with this, the impact of international oil prices that remain at historical lows and the ex-change rate that has reached a historical maximum of 22 pesos, corresponding to the uncertainty of the current North American policy of neoprotection. However, the greatest risk for Mexico is the monetary policy that the Federal Reserve (FED) will follow in the near future regarding the level of reference interest rates of federal funds and the uncertainty in the economic policy of North America before the announcements of renegotiation or rupture of NAFTA in 2018.Therefore, Mexico's Medium-term Public Policy in the face of current changes in North American Policies in the context of Neoprotectionism will be addressed from Post Keynesian thinking. This establishes as long as the State does not regulate the economic activity of the market - which always remains in imbalance-, the levels of both national and international interest rates will continue to be maintained, with a direct impact on the financing of productive investment, thereby limiting the long-term economic development especially from emerging countries.