The Effect of Emergence of China on Mexican Export Growth

Abstract

The impact of the emergence of China on Latin American states has intrigued many researchers. Mexico, among others, has the most similar export structure to that of Chinas compared to other Latin American countries and, at the same time, suffered a downfall in manufacturing industries, especially in maquiladora industries. Given this background, the aim of this study is to find out whether there has been a change in the competitive composition between China and Mexico in recent years (2000-2013) and to identify which Mexican industries have been affected by Chinese exports using Weighted Least Squares regression method and Revealed Comparative Advantage index. The results indicate that there has been a negative China impact on Mexican textile industries and positive China impact on medium-tech and high-tech machinery manufacturing industries both in short term and long term. In other words, China still has a high level of comparative advantage in textile industries, which led Mexican exports to suffer in those fields until recent years. Meanwhile, Mexican exports on medium-tech and high-tech machinery manufacturing industries are enhancing its competitiveness. To explain such result, it is more likely that both countries are on their way of reinforcing comparative advantages and expanding market than that Chinese export growth has derived Mexican export growth.