The results in Chiquiar and Ramos-Francia (2005) suggested that the long-run relationship between the US’s and Mexico’s manufacturing sectors was weakened after China joined the World Trade Organization (WTO). When that paper was made, however, this shock was too recent and, therefore, the analysis was based only on end-of-sample structural break tests. In this note we use updated information to revisit this issue. The results suggest that, by shifting resources towards those sectors where it remained competitive, Mexico’s response allowed the effect of China’s entry to the WTO on its long-term relationship with the U.S. manufacturing sector to be only temporary.
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Paper provided by Banco de México in its series Working Papers with number
2008-08.
Find related papers by JEL classification: E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles F15 - International Economics - - Trade - - - Economic Integration F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
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