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Does The Impact of Trade Liberalisation on Exports, Imports, the Balance of Payments and Growth: the Case of Mexico

  • Penelope Pacheco-López

    ()

The aim of this paper is to disentangle the effects of trade liberalisation during the mid-1980s from the liberalisation involved in the North American Free Trade Agreement (NAFTA) on exports, imports and the balance of payments in Mexico. The main empirical results suggest that the trade reforms during the mid01980s had a significant impact on trade, exports and imports; however, the effects of NAFTA are negligible. Since the mid-1980s, the propensity to import has exceeded the propensity to export and this has worsened the growth rate consistent with balanced trade, and this is a major explanation of the slowdown of Mexico's growth in recent years. NAFTA has not delivered the improved growth performance that was promised by Mexico's political leaders at the time.

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File URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/0401.pdf
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Paper provided by School of Economics, University of Kent in its series Studies in Economics with number 0401.

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Date of creation: Jan 2004
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Handle: RePEc:ukc:ukcedp:0401
Contact details of provider: Postal: School of Economics, University of Kent, Canterbury, Kent, CT2 7NP
Phone: +44 (0)1227 827497
Web page: http://www.kent.ac.uk/economics/

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  1. J.-C. Moreno-Brid, 1998. "Balance-of-payments constrained economic growth: the case of Mexico," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 51(207), pages 413-433.
  2. Parikh, Ashok, 2002. "Impact of Liberalization, Economic Growth and Trade Policies on Current Accounts of Developing Countries: An Econometric Study," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  3. Balassa, Bela, 1983. "Trade policy in Mexico," World Development, Elsevier, vol. 11(9), pages 795-811, September.
  4. Mary E. Burfisher & Sherman Robinson & Karen Thierfelder, 2001. "The Impact of NAFTA on the United States," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 125-144, Winter.
  5. Amelia Santos-Paulino & A. P. Thirlwall, 2004. "The impact of trade liberalisation on exports, imports and the balance of payments of developing countries," Economic Journal, Royal Economic Society, vol. 114(493), pages F50-F72, 02.
  6. Ostry, Jonathan D. & Rose, Andrew K., 1992. "An empirical evaluation of the macroeconomic effects of tarrifs," Journal of International Money and Finance, Elsevier, vol. 11(1), pages 63-79, February.
  7. Anthony Philip Thirlwall, 1979. "The Balance of Payments Constraint as an Explanation of International Growth Rate Differences," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 32(128), pages 45-53.
  8. Dani Rodrik, 1992. "The Limits of Trade Policy Reform in Developing Countries," Journal of Economic Perspectives, American Economic Association, vol. 6(1), pages 87-105, Winter.
  9. World Bank, 2002. "World Development Indicators 2002," World Bank Publications, The World Bank, number 13921, March.
  10. John S. L. McCombie, 1997. "On the Empirics of Balance-of-Payments-Constrained Growth," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 19(3), pages 345-375, April.
  11. Thirlwall, Anthony P & Hussain, Mohammed Nureldin, 1982. "The Balance of Payments Constraint, Capital Flows and Growth Rate Differences between Developing Countries," Oxford Economic Papers, Oxford University Press, vol. 34(3), pages 498-510, November.
  12. Rudiger Dornbusch & Alejandro Werner, 1994. "Mexico: Stabilization, Reform, and No Growth," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 253-316.
  13. Skott, Peter & Larudee, Mehrene, 1998. "Uneven Development and the Liberalisation of Trade and Capital Flows: The Case of Mexico," Cambridge Journal of Economics, Oxford University Press, vol. 22(3), pages 277-95, May.
  14. Clavijo, Fernando & Faini, Riccardo, 1990. "Las elasticidades ingreso cíclicas y seculares de la demanda de importaciones en los países en desarrollo," El Trimestre Económico, Fondo de Cultura Económica, vol. 0(225), pages 89-100, enero-mar.
  15. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
  16. Juan Carlos Moreno-Brid, 1999. "Mexico's Economic Growth and the Balance of Payments Constraint: A cointegration analysis," International Review of Applied Economics, Taylor & Francis Journals, vol. 13(2), pages 149-159.
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