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Competitiveness – A Comparison of China and Mexico


  • Immaculada Martínez-Zarzoso
  • Felicitas Nowak-Lehmann D.
  • Sebastian Vollmer


Latin American countries have lost competitiveness in world markets in comparison to China over the last two decades. The main purpose of this study is to examine the causes of this development. To this end an augmented Ricardian model is estimated using panel data. The explanatory variables considered are productivity, unit labor costs, unit values, trade costs, price levels (in PPP), and real exchange rates in relative terms. Due to data restrictions, China’s relative exports (to the US, Argentina, Japan, Korea, UK, Germany, and Spain) will be compared to Mexico’s exports for a number of sectors over a period of eleven years. Panel and pooled estimation techniques (SUR-estimation, panel Feasible Generalized Least Squares (panel/pooled FGLS)) will be utilized to better control for country-specific effects (differences between American, Argentinian, Japanese, Korean, German, British, and Spanish markets), cross-section specific (sector-specific) effects, and correlation over time.

Suggested Citation

  • Immaculada Martínez-Zarzoso & Felicitas Nowak-Lehmann D. & Sebastian Vollmer, 2007. "Competitiveness – A Comparison of China and Mexico," CESifo Working Paper Series 2111, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_2111

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    References listed on IDEAS

    1. Ehsan U. Choudhri & Lawrence L. Schembri, 2002. "Productivity performance and international competitiveness: an old test reconsidered," Canadian Journal of Economics, Canadian Economics Association, vol. 35(2), pages 341-362, May.
    2. Alan V. Deardorff, 2014. "Local comparative advantage: Trade costs and the pattern of trade," International Journal of Economic Theory, The International Society for Economic Theory, vol. 10(1), pages 9-35, March.
    3. Alejandro Cuñat & Marco Maffezzoli, 2007. "Can Comparative Advantage Explain the Growth of us Trade?," Economic Journal, Royal Economic Society, vol. 117(520), pages 583-602, April.
    4. Lücke, Matthias & Rothert, Jacek, 2006. "Central Asia's comparative advantage in international trade," Kiel Economic Policy Papers 6, Kiel Institute for the World Economy (IfW).
    5. Busse, Matthias, 2003. "Tariffs, Transport Costs and the WTO Doha Round: The Case of Developing Countries," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 4(1).
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    Cited by:

    1. Ceglowski Janet & Golub Stephen S., 2012. "Does China Still Have a Labor Cost Advantage?," Global Economy Journal, De Gruyter, vol. 12(3), pages 1-30, September.
    2. Ceglowski Janet & Golub Stephen S., 2012. "Does China Still Have a Labor Cost Advantage?," Global Economy Journal, De Gruyter, vol. 12(3), pages 1-30, September.


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