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US-Mexico fresh vegetable trade: the effects of trade liberalization and economic growth

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  • Malaga, Jaime E.
  • Williams, Gary W.
  • Fuller, Stephen W.

Abstract

Studies of US-Mexico vegetable trade have generally emphasized the importance of US tariffs in determining the competitive advantage of US producers. Even so, research has identified at least four factors related primarily to the different levels of economic development in the US and Mexico that also have important effects on US-Mexico agricultural trade in general and fresh vegetable trade in particular. These include the differential growth rates of US and Mexican real wages, production technology (yields), and per capita income as well as cyclical movements in the real Mexican Peso/US Dollar exchange rate. This study examines the relative contribution of NAFTA and the development-related factors to likely future changes in US fresh vegetable imports from Mexico. The analysis employs an econometric simulation model of US and Mexican markets for five fresh vegetables (tomatoes, cucumbers, squash, bell peppers, and onions) accounting for 80% of US fresh vegetable imports. The results suggest that the 1994-1995 Peso devaluation rather than NAFTA was primarily responsible for the sharp increase in US imports of Mexican vegetables observed in the first years following the implementation of NAFTA. Over time, however, the results suggest that differences in the growth rates of US and Mexican production yields and, to a lesser extent, of US and Mexican real incomes and/or real wage rates could plausibly contribute more to the future growth of US tomato, squash, and onion imports from Mexico than the trade liberalizing effects of NAFTA. © 2001 Elsevier Science B.V. All rights reserved.

Suggested Citation

  • Malaga, Jaime E. & Williams, Gary W. & Fuller, Stephen W., 2001. "US-Mexico fresh vegetable trade: the effects of trade liberalization and economic growth," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 26(1), October.
  • Handle: RePEc:ags:iaaeaj:177435
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    References listed on IDEAS

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    1. Taylor, Timothy G. & Wilkowske, Gary H., 1984. "Productivity Growth in the Florida Fresh Winter Vegetable Industry," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 16(02), pages 55-62, December.
    2. Fuller, Stephen W. & Capps, Oral, Jr. & Bello, Haruna & Shafer, Carl E., 1991. "Structure Of The Fresh Onion Market In The Spring Season: A Focus On Texas And Its Competition," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 16(02), December.
    3. Fuller, Stephen & Gillis, Melanie & Ziari, Houshmand A., 1996. "Effect of Liberalized U.S.-Mexico Dry Onion Trade: A Spatial and Intertemporal Equilibrium Analysis," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 28(01), pages 135-147, July.
    4. 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.
    5. Ornelas, Fermin & Shumway, C. Richard, 1993. "Supply Response and Impact of Government-Supported Crops on the Texas Vegetable Industry," Agricultural and Resource Economics Review, Cambridge University Press, vol. 22(01), pages 27-36, April.
    6. Fuller, Stephen W. & Gillis, Melanie & Ziari, Houshmand A., 1996. "Effect Of Liberalized U.S.-Mexico Dry Onion Trade: A Spatial And Intertemporal Equilibrium Analysis," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 28(01), July.
    7. Williams, Gary W. & Rosson, C. Parr, III, 1992. "Agriculture And The North American Free Trade Agreement," Choices, Agricultural and Applied Economics Association, vol. 7(4).
    8. Huang, Kuo S., 1993. "A Complete System of U.S. Demand for Food," Technical Bulletins 157046, United States Department of Agriculture, Economic Research Service.
    9. Zepp, Glenn A. & Simmons, R.L., 1979. "Producing Fresh Winter Vegetables in Florida and Mexico, Costs and Competition," Economics Statistics and Cooperative Services (ESCS) Reports 143677, United States Department of Agriculture, Economic Research Service.
    10. Ornelas, Fermin S. & Shumway, C. Richard, 1993. "Supply Response And Impact Of Government-Supported Crops On The Texas Vegetable Industry," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 22(1), April.
    11. Taylor, Timothy G. & Wilkowske, Gary H., 1984. "Productivity Growth In The Florida Fresh Winter Vegetable Industry," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 16(02), December.
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    Cited by:

    1. Garcia Alvarez-Coque, Jose-Maria & Martinez-Gomez, Victor & Villanueva, Miquel, 2006. "Modelling Euro-Mediterranean Agricultural Trade," Working Papers 18875, TRADEAG - Agricultural Trade Agreements.
    2. Wu, Feng & Guan, Zhengfei, 2015. "Modeling the Interactions of Strawberry Commodity and Labor Markets in the US and Mexico," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205887, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    3. Jaramillo-Villanueva, Jose Luis & Sarker, Rakhal, 2009. "Exchange Rate Sensitivity of Fresh Tomatoes Imports from Mexico to the United States," 2009 Conference, August 16-22, 2009, Beijing, China 51459, International Association of Agricultural Economists.
    4. Xochitl Cruz-Núñez & Luis Conde & Luis Ruiz-Suárez, 2008. "Use of IPCC GHG key sources analysis to Mexico’s environmental policy," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 13(2), pages 179-191, February.
    5. Hugo Pedro Boff, 2004. "The Supply Of Perishable Goods," Econometric Society 2004 Latin American Meetings 306, Econometric Society.
    6. Malaga, Jaime E. & Williams, Gary W., 2006. "Mexican Agricultural and Food Export Competitiveness," Reports 90778, Texas A&M University, Agribusiness, Food, and Consumer Economics Research Center.
    7. Martinez, Lourdes R. & Thornsbury, Suzanne & Nagai, Tomokazu, 2006. "National and International Factors in Pickle Markets," Agricultural Economic Report Series 10938, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    8. Mario M. Carrillo-Huerta & Israel Minor Bonilla, 2005. "The Effect of NAFTA on Mexican Agricultural Exports to the United States: The Case of Coffee Beans, 1970-2003," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 10(2), pages 76-93, Summer.
    9. Letourneau, Deborah K. & Ando, Amy W. & Jedlicka, Julie A. & Narwani, Anita & Barbier, Edward, 2015. "Simple-but-sound methods for estimating the value of changes in biodiversity for biological pest control in agriculture," Ecological Economics, Elsevier, vol. 120(C), pages 215-225.

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