Export-led Growth: A Case Study of Mexico

Waithe, Kimberly and Lorde, Troy and Francis, Brian (2010): Export-led Growth: A Case Study of Mexico. Published in: International Journal of Business, Humanities and Technology , Vol. 1, No. 1 (2011): pp. 33-44.

Abstract

Against the backdrop of export-oriented policy reforms to Mexico’s trade regime in the mid 1980s, the present study undertakes a case study of economic growth in Mexico. Using an export-augmented neoclassical production function, the validity of the Export-led Growth Hypothesis for Mexico is also tested over the period 1960-2003. Evidence offers support for the Hypothesis in the short run; however, contrary to the Hypothesis, long-run results suggest an inverse relationship between exports and GDP. A likely explanation is the high import content and diminishing local content of exports, and weak linkages with domestic suppliers, thus reducing possible spillover or multiplier benefits. If Mexico is to succeed in its quest to achieve high and steady economic growth, current incentive schemes that allow tax-free entry of imported inputs and raw materials for export purposes must be reconsidered. Finally, policies that promote technological innovation in manufacturing and linkages with local suppliers are imperative.

• Item Type: MPRA Paper
• Language: English
• Keywords: import substitution; export-orientation; trade reform; export-led growth hypothesis
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C22 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes; F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O54 - Latin America ; Caribbean

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