Mexico's manufacturing competitiveness in the US market: A short-term analysis

• Published in: Investigación económica Vol. 74; no. 292; pp. 91 - 114
• Main Authors: Villarreal, Cuauhtémoc Calderón, Ahumada, Víctor M. Cuevas
• Format: Journal Article
• Language: English
• Published: Mexico City Elsevier España, S.L.U 01-04-2015; Universidad Nacional Autónoma de México; Universidad Nacional Autonoma de Mexico; UNAM, Facultad de Economía
• Subjects: América Latina; C32; Comparative advantage; Competitiveness; competitividad internacional; Currency devaluation; Economic indices; Economic policy; Economics; Exports; F14; Foreign exchange rates; Imports; industria manufacturera; Interest rates; international competitiveness; International economics; International trade; Labor productivity; Latin America; Manufacturers; Manufacturing; Manufacturing industries; manufacturing industry; Mexico; México; Productivity; Real exchange rates; Studies; Mexico; C32; América Latina; manufacturing industry; industria manufacturera; competitividad internacional; F14; Mexico; México; international competitiveness; Latin America
• ISSN: 0185-1667; 2594-2360
• DOI: 10.1016/j.inveco.2015.08.004

This paper investigates the impact of some key variables on Mexican manufacturing competitiveness in the US market. To that end, we construct an international competitiveness (IC) index for the manufacturing sector. The responsiveness of such an index to an ample set of variables is evaluated through the use of a stationary VAR model. The short-term empirical evidence indicates that: 1) real currency depreciation weakens, rather than strengthens, IC; 2) labor productivity has a strong positive effect on IC, and 3) a real interest rate increase reduces IC. These findings reflect three fundamental problems of the Mexican manufacturing sector and thus have important economic policy implications.
Este artículo investiga el impacto de algunas variables clave en la competitividad internacional (CI) de la industria manufacturera mexicana en el mercado estadounidense. Para tal fin, se construye un índice de CI para el sector manufacturero. La sensibilidad de dicho índice frente a determinadas variables se evalúa mediante el uso de un modelo VAR estacionario. La evidencia empírica de corto plazo indica que: 1) una depreciación real del peso deteriora, en lugar de fortalecer, la CI; 2) la productividad laboral surte un efecto positivo de larga duración en la CI, y 3) un incremento en la tasa de interés real reduce la CI. Estos hallazgos reflejan tres problemas de fondo de las manufacturas mexicanas y revisten importantes implicaciones de política económica.