| Summary: | This thesis explores the idea that economic evolution is a process of self-transformation over time, in which the source of endogenous growth is structural change in economic activities. Structural change is seen as the core factor encouraging economic evolution, via a creative destruction process. The evolutionary approach is an attempt to explain this continual self-transformation of the economy reflecting the fact that capitalist economies are never in equilibrium. This research contends productivity growth is the main cause of structural change that explains the endogenous process of self-development and growth in the Mexican economy. Thus, the main research question concerned how to explain the process of productivity growth driven structural change that endogenously selftransformed the Mexican economy. This research confirms that the Mexican economy is self-transforming and that the key sector in this self-transformation is manufacturing. The Mexican economy is characterized by diversity of productivity growth experience across its manufacturing sector. In effect, Mexican manufacturers exhibit independent behaviour. As the Mexican economy has never been in equilibrium, the neo-classical notion of equilibrium has been avoided because it is an unsuitable theoretical structure in explaining how the Mexican economy evolved over time. An alternative to the production function approach is required - one that is coherent with the evolutionary perspective based on nonaggregate components and yet operates at the industrial level. Fabricant's productivity laws, provide a suitable framework for explaining how manufacturing labour productivity makes the economy self-transform. Fabricant's second productivity law suggests that there is a positive correlation between the growth of labour productivity and the growth of output [gl = al + bl g]. This is the core relation explaining self-transformation, because it is a different form of production relationship. Metcalfe et al (2002) derived the same correlation, however from a technical progress function perspective. In essence, every individual sector makes a contribution to overall productivity growth in which individual productivity growth rates are economically independent due to inherent manufacturing heterogeneity within the economic structure. This framework supports the idea of a mesolevel of economic growth far better than the macroeconomic approach. This thesis concludes that the technical progress function emanating from the work of Fabricant and Metcalfe et al. explains the dynamic diversity in labour productivity growth across Mexican manufacturing sub-sectors, whilst illustrating how a change in State economic policy influenced structural change in manufacturing diversity. 11
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