A review of Mexico’s participation in global value chains

Elena Vidal and Alberto González Pandiella

No 1802, OECD Economics Department Working Papers from OECD Publishing

Abstract: Mexico is well integrated into global value chains (GVCs). Its exports as a share of GDP have tripled since 1988. Mexico’s participation in GVCs is mainly driven by backward linkages, i.e. the share of foreign value added in Mexico’s total exports is large, which reflects Mexico’s importance in assembling processes in some manufacturing sectors. Conversely, forward participation, i.e. to what extent trading partners exports incorporate Mexico’s value added, remains low. Ongoing nearshoring trends provide opportunities to strengthen and improve Mexico’s participation in GVCs, and to move up in the value chain and develop stronger forward linkages, which are associated to higher productivity growth. This paper zooms into the most recent developments to assess whether Mexico is already benefiting from these trends. The empirical analysis suggests that Mexico’s wide trade agreements and low tariffs, will help, but improving the business environment and the rule of law, a better educated workforce, or increasing female labour participation would also facilitate deepening forward GVCs linkages.

Keywords: Global value chains; Gravity models; Nearshoring; Trade (search for similar items in EconPapers)
JEL-codes: F14 F43 F62 O54 (search for similar items in EconPapers)
Date: 2024-05-07
New Economics Papers: this item is included in nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:oec:ecoaaa:1802-en

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