Economic

CEPAL Review, 2011

The paper argues that the weak effect of exports on gdp growth in Mexico is partly explained by two features of the Mexican economy that arose subsequent to trade liberalization: the peso's continued real appreciation and the large and rising share of the maquila sector in manufacturing exports. The argument is developed through an analytical example for a stationary economy with no investment. As motivation for the example's main assumptions, the paper presents empirical evidence gathered from the country's Annual Industrial Survey and the estimation of cointegration equations for maquila and non-maquila intermediate imports. The empirical evidence shows that (a) exports are highly dependent on imports and thus benefit from trade liberalization, and (b) while real exchange rate changes can induce substitution between local and imported intermediate goods generally, this is not the case in the maquila sector.

International Review of Applied Economics, 2001

In this paper, the results of an exports led growth strategy accompanied by a trade liberalisation policy, implemented in Mexico, are analysed for three periods 1978± 82, 1983± 87 and 1988± 94. The input± output analysis is utilised, to determine the effects of manufacturing exports on gross output, to measure the degree of the global integration of the economy and, in particular, to measure the integration of the leading exporting manufacturing industries to domestic industries. The effects of liberalisation on increasing imports and the displacement of domestic production by imports, in manufacturing, are also measured and analysed. The general results of this analysis allowed us to conclude that the positive effect of increasing manufacturing exports on expanding production is limited and offset by the increasing manufacturing imports displacing domestic production. The increasing imports are mainly inputs demanded by growing exports.

Cambridge Journal of Economics, 2015

This paper estimates a structural model of the balance of payments, with disaggregated exports (manufactures and other) and imports (final and intermediate), and a reduced form model of the trade balance for the Mexican economy. The analysis identifies structural changes in the composition of Mexico's trade and the parameters that affect it across five subperiods marked by statistical breakpoints. The results indicate that a tightening of the balance-of-payments constraint may account for the post-liberalization slowdown in Mexico's growth only during certain subperiods, and that the impact of real exchange rate changes on the trade balance has diminished, most likely as a result of the increasing integration of export industries into global supply chains. The results also suggest an asymmetry, whereby a country cannot sustain growth above the rate consistent with balance-of-payments equilibrium, as expected, but it can grow persistently below that rate when other constraints are more binding.

Structural Change and Economic Dynamics, 2013

Previous studies have found that a tightening of the balance of payments (BP) constraint can explain the slowdown in Mexico's growth after its trade liberalization in the late 1980s. This paper develops a disaggregated model of the BP constraint with two types of exports (manufactured and primary commodities) and two types of imports (intermediate and final goods). Econometric estimates (including tests for structural breaks) show that the BPequilibrium growth rate did not fall, but instead rose in the post-liberalization period, so this model cannot account for the country's growth slowdown. Instead, the analysis points to the need to consider the real exchange rate as well as internal obstacles and policies.

2003

This paper examines the impact of trade liberalisation on the trade balance and balance of payments in Mexico. Two events are identified as being important in this regard. The first one is when trade liberalisation started in a serious way in 1985 and Mexico became a member of GATT in 1986. The second event is related to facts involved in Mexico's accession to NAFTA in 1994. Complete trade balance and balance of payments functions, starting from their simple expression, are specified. The models are then extended to include liberalisation indicators, defined as shift dummy variables. The econometric evidence, by applying time-series analysis, shows that the trade reforms launched during the mid-1980s worsened the position of the trade balance by between 14 and 18 percentage points. Regarding the effects of trade liberalisation related to NAFTA on the trade balance, a negative impact is shown during the immediate two years after NAFTA came out. The effects of liberalisation on the balance of payments are not significant. Subsequently, the empirical analysis investigates whether the changing trade performance of Mexico has affected its long run economic growth rate consistent with balance of payments equilibrium. Results indicate that the increase in the income elasticity of demand for imports, which has not been compensated by a higher rate of growth of exports, has contributed to the slowdown of Mexico's long run equilibrium growth rate. The findings have important policy implications for the credit-worthiness of the country, its ability to borrow, and the sustainability of growth.

Mexican economy has experienced a significant growth in exports as a result of the increasing economic integration between Mexico and USA. The objective of this paper is to evaluate the role of exports in the economic growth of Mexico in order to determine whether the expansion in exports has created dynamic effects on the overall growth of Mexican economy. The methodology applied consists of a panel cointegration model that estimated the relationship between exports and gdp growth of the Mexican economy at the state level using data of exports and gdp from the Bank of Economic Information of the Mexican Institute of Statistics, Geography and Informatics. The results show positive but weak effects of exports on Mexico's regional economic growth.

Journal of Post Keynesian Economics, 2004

In this paper, the results of an export-led growth strategy accompanied by a trade liberalization policy implemented in Mexico are analyzed for various periods between 1978 and 2000. The input-output analysis is used to determine the effects of growing exports on gross output and on the level of employment. The results of this analysis allowed us to conclude that the positive effect of increasing manufacturing exports on production is limited and offset by manufacturing imports, thus displacing domestic production. The positive effect of exports on direct and indirect employment is not as important as that of domestic production. However, these positive effects of exports are accentuated by the North American Free Trade Agreement.

SSRN Electronic Journal, 2000

Since Mexico's devaluation of the peso in 1994, some observers have called for policies designed to keep the real exchange rate highly competitive in order to promote exports and output growth. However, over the past few decades, devaluations of the real exchange rate have been associated nearly exclusively with economic contraction, while real appreciations have been followed almost invariably by expansions in economic activity. The purpose of this paper is to attempt to disentangle the possible factors underlying this correlation--(1) reverse causation from output to the real exchange rate, (2) spurious correlation with third factors such as capital account shocks, and (3) temporary contractionary effects of devaluation--and determine whether, once those factors are accounted for, a positive, long-run effect of real depreciation on output can be identified in the data. Based on the results of a VAR model designed to explore the linkages between the real exchange rate and output, we conclude that even after sources of spurious correlation and reverse causation are controlled for, real devaluation has led to high inflation and economic contraction in Mexico. While changes in Mexico's economic structure and financial situation may qualify the future applicability of this conclusion, we view our findings as pointing to substantial risks to targeting the exchange rate at too competitive a level.

Economic Systems, 2011

2012

This paper investigates why the average growth rate of the Mexican economy has been so disappointing since the trade liberalization of the late 1980s. Some previous work has argued that the growth slowdown can be attributed to a tightening of the balance of payments constraint on Mexico's growth, due to a rise in the income elasticity of import demand that outweighed the increase in export growth after trade liberalization. However, such an aggregative approach ignores the distinction between imports of final goods and intermediate goods, which is important in Mexico due to the high intermediate import content of manufactures-especially those produced for export. To address this issue, this paper presents a disaggregated model of the balance of payments constraint with two types of exports (manufactured and primary commodities) and two types of imports (intermediate and final goods). The empirical results show that the balance of payments constrained (equilibrium) growth rate did not fall, but instead rose slightly post-liberalization, so this model cannot account for the actual growth slowdown. Instead, the analysis points to an important role for the real exchange rate, which is overlooked in the balance of payments constrained growth model, as well as internal obstacles and policies.