NAFTA trade (and some extra NAFTA trade) in value added and its distribution, 1995–2011

Rosario Cervantes-Martínez (), Jorge Villaseñor-Becerra () and Martín Romero-Morett ()
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Rosario Cervantes-Martínez: University of Guadalajara
Jorge Villaseñor-Becerra: University of Guadalajara
Martín Romero-Morett: University of Guadalajara

Journal of Economic Structures, 2016, vol. 5, issue 1, 1-22

Abstract: Abstract The trade deficit of the USA with its NAFTA partners, Mexico and Canada, increased since 1994 from 21,991 to 119,257 million dollars in 2013 (UNCOMTRADE, 2015. http://comtrade.un.org/db ), and most of this increase is explained by the growth in the volume of commerce between Mexico and the USA. Nonetheless, since the mid-1990s Mexico has been experiencing its lowest economic growth rates. By using the World Input Output Database and the Input–Output Analysis, this paper presents an estimate of the intra-NAFTA trade flows in terms of value added and its distribution among both labor and capital; labor by skill level; and content of persons engaged. The findings show that trade between the NAFTA members is quite different concerning value added. In 1995 the USA had a trade deficit of 30,351 million dollars with Canada, of which 6384 million dollars was a surplus in favor of Canada in terms of value added. Similarly, the same year the USA had a deficit of 4276 million dollars with Mexico that became a surplus for the latter of 4561 million dollars in terms of value added. For the following years, until 2011, a similar pattern was observed. The distribution of this value added between capital and labor compensations tends to favor USA and Canadian workers, especially middle-skilled labor, and the sector that tends to have the lowest share is the low-skilled Mexican and Canadian workers. Even more, the average labor compensations per hour grew less for the three types of Mexican workers.

Keywords: Value added in trade; Income distribution; NAFTA (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1186/s40008-016-0059-2

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