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Trade Liberalisation in Mexico: Rhetoric and Reality

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Author Info
Penelope Pacheco-López ()
A.P. Thirlwall ()

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Abstract

This paper examines the process of trade liberalisation in Mexico, particularly since the mid-1980s and the signing of the NAFTA agreement, and its impact on economic performance. The average growth of GDP of the Mexican economy since liberalisation has been only one-half the rate pre-liberalisation and we attribute this deteriorating performance to a rise in the income elasticity of demand for imports (partly associated with an increase in foreign direct investment with a high import content) which has not been compensated by a sufficiently fast growth of exports, leading to severe balance of payments difficulties. Mexican exchange rate policy has not helped the situation.

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File URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/0403.pdf
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Publisher Info
Paper provided by Department of Economics, University of Kent in its series Studies in Economics with number 0403.

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Date of creation: Jan 2004
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Handle: RePEc:ukc:ukcedp:0403

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Postal: Department of Economics, University of Kent at Canterbury, Canterbury, Kent, CT2 7NP
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Related research
Keywords: trade liberalisation; economic growth; balance of payments; foreign direct investment; Mexico; NAFTA;

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Find related papers by JEL classification:
C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-80, November. [Downloadable!] (restricted)
  2. David M. Gould, 1998. "Has NAFTA changed North American trade?," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q 1, pages 12-23. [Downloadable!]
  3. Mario Cimoli & Nelson Correa, 2002. "Trade Openess and Technological Gaps in Latin America: a Low Growth Trap," LEM Papers Series 2002/14, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy. [Downloadable!]
  4. Juan Carlos Moreno-Brid, 1999. "Mexico's Economic Growth and the Balance of Payments Constraint: a cointegration analysis," International Review of Applied Economics, Taylor and Francis Journals, vol. 13(2), pages 149-159, May. [Downloadable!] (restricted)
  5. Nora C. Lustig, 1997. "NAFTA: Setting the Record Straight," The World Economy, Blackwell Publishing, vol. 20(5), pages 605-614, 08. [Downloadable!] (restricted)
  6. Robert A. Blecker, 1996. "NAFTA, the Peso Crisis, and the Contradictions of the Mexican Economic Growth Strategy," SCEPA Working Papers 1996-04, Schwartz Center for Economic Policy Analysis (SCEPA), The New School. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Fugarolas Álvarez-Ude, Guadalupe & Matesanz Gómez, David, 2005. "Restricción de balanza de pagos y vulnerabilidad externa en la argentina de los noventa. Un análisis de caso," MPRA Paper 210, University Library of Munich, Germany, revised 2005. [Downloadable!]
  2. Penelope Pacheco-López, 2004. "Foreign Direct Investment, Exports and Imports in Mexico," Studies in Economics 0404, Department of Economics, University of Kent. [Downloadable!]
  3. Cruz, Moritz, 2008. "Can Free Trade Guarantee Gains from Trade?," Working Papers RP2008/97, World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  4. Robert A. Blecker, 2006. "Macroeconomic and Structural Constraints on Export-Led Growth in Mexico," Working Papers 2006-05, American University, Department of Economics. [Downloadable!]
  5. Arbache, Jorge Saba, 2004. "Do Structural Reforms always Succeed? Lessons from Brazil," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
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