Is Mexico A Lumpy Country?

Andrew Bernard, Raymond Robertson and Peter Schott

No 10898, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Mexico's experience before and after trade liberalization presents a challenge to neoclassical trade theory. Though labor abundant, it nevertheless exported skill-intensive goods and protected labor-intensive sectors prior to liberalization. Post-liberalization, the relative wage of skilled workers rose. Courant and Deardorff (1992) have shown theoretically that an extremely uneven distribution of factors within a country can induce behavior at odds with overall comparative advantage. We demonstrate the importance of this insight for developing countries. We show that Mexican regions exhibit substantial variation in skill abundance, offer significantly different relative factor rewards, and produce disjoint sets of industries. This heterogeneity helps to both undermine Mexico's aggregate labor abundance and motivate behavior that is more consistent with relative skill abundance.

JEL-codes: F11 J31 (search for similar items in EconPapers)
Date: 2004-11
Note: ITI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Published as Andrew B. Bernard & Raymond Robertson & Peter K. Schott, 2010. "Is Mexico a Lumpy Country?," Review of International Economics, Blackwell Publishing, vol. 18(5), pages 937-950, November.

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Journal Article: Is Mexico a Lumpy Country? (2010)
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