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A Decomposition of North American Trade Growth since NAFTA

Author

Listed:
  • Russell Hillberry

    (USITC and Purdue University)

  • Christine McDaniel

    (USITC)

Abstract

Total U.S. trade with NAFTA partners has increased 78 percent in real terms since 1993-U.S. Mexico trade alone is up 141 percent-compared to a 43 percent increase in U.S. trade with the rest of the world. In this article we compare the nature of U.S. trade growth with Canada and Mexico to growth in U.S. trade with non NAFTA partners. We apply a simple decomposition of trade growth offered by Hummels and Klenow (2002) that provides insights into whether the United States is trading more of the same goods with NAFTA partners since 1993, or trading new products. The results provide evidence of both. A sizeable component of U.S. trade growth since 1993 can be explained by increases in the variety of products the U.S. imports from Mexico.

Suggested Citation

  • Russell Hillberry & Christine McDaniel, 2003. "A Decomposition of North American Trade Growth since NAFTA," International Trade 0303003, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpit:0303003
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    References listed on IDEAS

    as
    1. Kimberly A. Clausing, 2001. "Trade creation and trade diversion in the Canada - United States Free Trade Agreement," Canadian Journal of Economics, Canadian Economics Association, vol. 34(3), pages 677-696, August.
    2. Feenstra, Robert C, 1994. "New Product Varieties and the Measurement of International Prices," American Economic Review, American Economic Association, vol. 84(1), pages 157-177, March.
    3. Peter K. Schott, 2001. "Do Rich and Poor Countries Specialize in a Different Mix of Goods? Evidence from Product-Level US Trade Data," NBER Working Papers 8492, National Bureau of Economic Research, Inc.
    4. Feenstra, Robert C. & Madani, Dorsati & Yang, Tzu-Han & Liang, Chi-Yuan, 1999. "Testing endogenous growth in South Korea and Taiwan," Journal of Development Economics, Elsevier, vol. 60(2), pages 317-341, December.
    5. Peter K. Schott, 2001. "Do Countries Specialize?," Yale School of Management Working Papers ysm173, Yale School of Management.
    6. David Hummels & Peter J. Klenow, 2002. "The Variety and Quality of a Nation's Trade," NBER Working Papers 8712, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    NAFTA; International Trade;

    JEL classification:

    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business

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