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Economic Integration Mexico-United States and Regional Performance in Mexico

Leonardo E. Torre Cepeda, Joana CeciliaChapa Cantú and Eva Edith González González

No 2020-06, Working Papers from Banco de México

Abstract: Based on the World Input-Output Matrix 2016 estimated by Timmer et al. (2016), the Hypothetical Extraction Method is applied in a multi-country context to estimate Mexico's gross output and value added linked to the economic activity of the United States; and then the gross output and value added of the United States linked to Mexico's economic activity. Next, it is shown based on the Ghosh Regional Model how the value added of Mexico linked to the economic activity in the United States is allocated among its sectors and regions. The results capture the strong economic linkage between both economies at the aggregate level, as well as its sectoral concentration. The results also indicate that the Northern and Central regions of Mexico are those with the strongest link to the United States; followed by the Southern region, where the largest share of the oil industry is located.

Keywords: Hypothetical Extraction; Ghosh Input-Output Model; World Input-Output Matrix; Mexico; United States; Economic Integration (search for similar items in EconPapers)
JEL-codes: R11 R12 R15 (search for similar items in EconPapers)
Date: 2020-06
New Economics Papers: this item is included in nep-geo, nep-hme, nep-int and nep-ure
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Handle: RePEc:bdm:wpaper:2020-06