Nearshoring in Mexico: diverse options for industrial upgrading

Mexico has been a “nearshoring” platform for the United  States (U.S.) economy on a regular basis in recent decades. However, the nature and degree of Mexico’s integration within North America, as well as its ability to create and capture value and innovation rents in its core domestic industries, have varied over time. Previous examples of nearshoring in Mexico in the automotive and textile and apparel industries, we well as regional trade agreements like NAFTA and USMCA and global trade conflicts such as the U.S.-China trade war, have made Mexico a likely candidate to take advantage of recen…

Module for the Analysis of Growth in International Commerce (MAGIC): User Guide

This guide describes the main characteristics ofthe new Module far the Analysis of Growth in lnternational Commerce (MAGIC), developed by the subregional headquarters of the Economic Commission far Latin America and the Caribbean (ECLAC) in Mexico City. The fi rst part describes MAGIC's development and its main characteristics, as well as the technical requirements far using the software. A second part describes each of the new modules the MAGIC comprises, its functions and the parameters required befare consulting it. lt also includes an exercise far interpreting the data and indicators …

The Eurasian Economic Union & Latin America and the Caribbean: A Transcontinental Partnership

Establishing relations between the EAEU and LAC regions has been neither simple nor swift, but rather has resembled a tangled movement in search of mutual interests and sustainable communication. Sharing the adherence to the principles of inclusive and sustainable growth and mutually beneficial multilateral cooperation, the two regions have faced challenges in an attempt to leverage the potential of entrepreneurial, social and political contacts, primarily due to geographical remoteness and diverse historical background. Nevertheless, the common difficulties and the multifaceted strengths of t…

Revisiting constant market share analysis: An exercise applied to NAFTA

This article proposes a new formulation of constant market share (CMS) trade analysis inspired by the statistical principles supporting revealed comparative advantages (RCA). This novel approach is methodologically consistent and rooted in information theory. It also avoids the discrete-form residuals that plague traditional CMS analysis, while remaining simple to compute. The new “comparative market share analysis decomposition” (CMSD) is applied to the changes in the structure and origin of United States imports after the implementation of the North American Free Trade Agreement (NAFTA). It …

A glance at member countries of the Mesoamerica Integration and Development Project

This document is a contribution of the Economic Commission for Latin America and the Caribbean (ECLAC) to the information collection and the deliberations of the “XVII Summit of Heads of State and Government of the Tuxtla Mechanism of Dialogue and Cooperation.” ECLAC, as a member of the Interinstitutional Technical Group, ratifies its commitment with regional integration. Furthermore, this third edition of the document “A glance at member countries of the Mesoamerica Integration and Development Project” (2012 and 2015), underlines its support for the integration and development activities carr…

Trumping the NAFTA renegotiation An alternative policy framework for Mexican-United States cooperation and economic convergence

The effects of globalization and regional integration have not worked well for many Americans and Mexicans. The objective of this document is to assess the proposals of the Trump administration for revising NAFTA, the responses of the Mexican government, and progressive alternatives to both. Therefore, this paper will address what kind of economic policies are needed to achieve more inclusive and sustainable growth in both Mexico and the United States, given their current degree of integration and the changing character of global production and technology.…

Economic and Social Upgrading: Definitions, connections and exploring means of measurement

This paper reviews and synthesizes the literature on social upgrading, while exploring its connections with economic upgrading. Using the parsimonious method proposed by Bernhardt and Milberg and an alternative method that takes into account increases in national productivity, this paper analyzes the case of Mexico. Though the proposed approach to social upgrading can be made more sophisticated through the inclusion of more variables, in order to facilitate the replication of the analysis in developing countries where data are scarce, labor productivity, wages and employment were considered su…

Determinants and home-country effects of FDI outflows: Evidence from Latin American countries

Foreign direct investment (FDI) by Latin American companies has increased sharply since the beginning of the 2000s. While most investment flows correspond to firms from large economies (i.e. Argentina, Brazil, Chile, Mexico and Colombia), small economies have also witnessed the increasing internationalisation of their domestic companies. This study examines the strategies followed by multinational enterprises (MNEs) from Latin America when they decide to invest in other countries, highlighting differences by sector and issuer-country size. To that end a new database, which comprises quantitati…

Relations between CARICOM and Central America and the Dominican Republic: a window of opportunity for trade and investment

This publication represents a contribution by the Economic Commission for Latin America and the Caribbean (ECLAC) and the Organization of American States (OAS) to an analysis of the potential and the opportunities for trade, investment, and strategic partnerships between Central America, the Dominican Republic, and the Caribbean. The study covers the 14 countries of CARICOM: Antigua and Barbuda, the Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Suriname, and Trinidad and Tobago. It also analyzes the c…

Transnational innovation systems

This paper discusses the concept of transnational innovation systems (TNIS) and presents some experiences in Europe in the formation of TNIS. The real cases show that supporting the emergence of Transnational Innovation Systems has clear benefits for the countries and the regions involved which may be related to the enlargement of consumer, labour and factor markets, enhanced competition, extended division of labour and increased specialization (Lundquist and Trippl, 2011: 3). Regional integration across borders can therefore be of high importance for small and emerging economies, where resour…

Understanding the business cycle in Latin America: Prebisch's contributions

This paper analyzes Raúl Prebisch's less familiar contributions to economic theory, related to the business cycle, and heavily informed by the Argentinean experience. His views of the cycle emphasize the common nature of the cycle in the center and the Latin American periphery as one unified phenomenon. While his rejection of orthodoxy is less than complete, some elements of what would become a more Keynesian position are developed. In particular, a preoccupation with the management of the balance of payments and the need for capital controls as a macroeconomic management tool, considerab…

Trade and economic growth: a Latin American perspective on rhetoric and reality

There is a longstanding tradition of analyzing trade and growth in economics, going back to the discipline's founders. But for Latin America, the debate on the significance of this relationship has had much more than academic relevance. It has been one of the central components of the different approaches to development that have shaped the region's economic history, the other (closely related) component being the roles of the State and of the market in economic development. In Latin America, the dominant understanding of the relationship between trade and growth has evolved radicall…

Regional integration and public policy. Evaluation of the European experience and possible implications for Latin American integration

Socio-economic vulnerability to natural disasters in Mexico: rural poor, trade and public response

The increasing frequency and economic losses from natural disasters within the framework of decreasing agricultural prices is becoming crucial in increasing poverty in the Mexican rural economy. During the past two decades, the governmental withdrawal from supporting the agricultural sector with investments in physical, financial and logistic instruments continues to stress agricultural livelihoods, as current private mechanisms have not replaced them effectively. Natural disasters occurrence is increasingly producing severe damages to the so-called traditional agriculture, highly exposed to c…

Transaction costs in the transportation sector and infrastructure in North America: exploring harmonization of standards

Since the implementation in 1994 of the North American Free Trade Agreement, trade between the three North American countries has almost tripled. However there are substantial impediments for the efficient freight movements between the three countries. Major obstacles derived from transaction costs which reduce and sometimes eliminate the benefits gained from the removal of tariffs resulting from NAFTA. The paper analyzes North American truck, rail and maritime trade and transportation characteristics and operations that serve as the foundation to identify and quantify transaction costs caus…

The effectiveness of technical assistance, socio-economic development and the absorptive capacity of competition authorities

Using survey data on technical assistance projects that was collected by the International Competition Network's Competition Policy Implementation Working Group during 2004 and 2005, I estimate the effect of different types of technical assistance on several performance measures of recipient competition authorities. Moreover, I examine whether the impact of each type of technical assistance varies with the capacity of a recipient authority to absorb technical assistance (which I will refer to as absorptive capacity) and the socioeconomic development of the recipient country. A cle…

Central American Isthmus: economic evolution during 2005 and perspectives for 2006 (final evaluation)

1. Rasgos generales de la evolución reciente La actividad económica en el Istmo Centroamericano registró en 2005 una expansión igual a la del año anterior (4%), apenas por debajo del promedio de América Latina y el Caribe (4,3%). Excluyendo a Panamá, la tasa de crecimiento se elevó de 3,3% a 3,6%. También fue notable una menor dispersión de las tasas alrededor del promedio. Todos los países se hallan en la fase expansiva del ciclo económico, ya que se cumplieron tres años de incremento del producto interno bruto (PIB) por habitante, después del retroceso ocurrido en el bienio 2001-2002. Si …

Mexico: economic growth, exports and industrial performance after NAFTA

This article concerns Mexico's industrial policy and economic performance, focusing on an analysis of the structural changes associated with NAFTA that have occurred in the country's manufacturing sector. The purpose of the article is to improve our understanding of why the post-NAFTA evolution of the Mexican economy has been characterized by lights and shadows, with low inflation, low budget deficit and a surge in non-oil exports, and on the other hand a slower than expected expansion of economic activity and employment. The article also presents some implications of economi…

The United States-Central American Free Trade Agreement: fiscal implications for the Central American countries

In this paper we estimate the fiscal implications of the free trade agreement signed between the United States of America and the five Central American countries of Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. Of the five possible effects on fiscal revenue (direct, indirect, elasticity, substitution and induced), in this paper we estimate the first three. The fourth effect is most likely negligible, whereas the estimation of the fifth one would be plagued by uncertainty, so we do not attempt it here. We use comparative statics to estimate the impact. We find the adverse …

The Mexican maquila industry and the environment: an overview of the issues

The Mexico-United States border region comprises one of the most dynamic and complex industrial areas in the world. The region is characterized by high population growth and increasing urbanization and industrialization, all of which is taking place in a context of rapid political and economic change (Rincón, 2000). The Mexico-located maquila in-bond industry is a key player in this development. In the 1993-98 period, the maquilas accounted for 41.5% of the average Mexican export value (Dussel, 2000), and in the 1994-2000 period its share of foreign direct investment grew from 6% to 21…