The participation of Mexico in global supply chains: the challenge of adding Mexican value

Juan Blyde

Applied Economics Letters, 2014, vol. 21, issue 7, 501-504

Abstract: There is a general perception that Mexico's insertion in global supply chains has been mostly in assembly operations and that efforts should be made to incorporate additional domestic value in the international production networks in which the country participates. To examine this issue properly one needs to have a measure of the share of domestic value added that is effectively embodied in Mexico's exports. We analyse firm-level data from the Manufacturing Industry, maquiladora and Export Services Program census which covers all the firms that benefit from the Maquiladora and the Program of Temporary Imports to Produce Export Goods programs. We find that the share of domestic value added as a proportion of the firm's exports has been declining in the last 6 years. We show that the decline is not the result of market share reallocations; that it persists after controlling for price changes and that is observed across firms of all sizes. The results suggest that more segments of the supply chains are generally not moving into Mexico and that on the contrary there is a trend of falling domestic value added. This result contrasts with that of other countries engaged in similar export processing activities, like China.

Date: 2014
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DOI: 10.1080/13504851.2013.870647

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