Trade Liberalisation, the Peso, and Mexico's Commodity Trade Flows with the United States

Mohsen Bahmani-Oskooee and Scott Hegerty

Journal of Development Studies, 2009, vol. 45, issue 5, 693-725

Abstract: We assess the effects of real peso devaluations, as well as the effects of GATT and NAFTA, on Mexico's in-payments and out-payments with the United States for 102 industries. We find that relatively few trade flows are sensitive to changes in the real exchange rate, probably due to production-sharing and intra-industry trade, but devaluations affect Mexican imports more than exports. Trade liberalisation has had a larger impact, particularly on imports of intermediate goods and exports of certain manufactures. Many affected export industries are ones that have previously been shown to have economies of scale.

Date: 2009
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DOI: 10.1080/00220380802582387

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