“Trade Liberalisation and the Trade-Off between Growth and the Balance of Payments in Latin America” (2007), co-author A.P. Thirlwall, International Review of Applied Economics, 21 (4): 469-490. [Go to IRAE].

Abstract/Resumen

Abstract

The broad purpose of trade liberalisation is to raise the rate of growth of countries on a sustainable basis, consistent with the achievement of other macroeconomic objectives. In this paper we consider whether trade liberalisation in seventeen countries of Latin America has improved the trade-off between GDP growth and the trade balance, allowing the countries to grow faster without sacrificing foreign exchange. We find that in the aftermath of liberalisation, the majority of countries did grow faster,  but at the expense of a deteriorating trade balance. Testing formally for the impact of trade liberalisation in a full model of trade balance determination, we find that only in Chile and Venezuela has the trade-off unequivocally improved. In other countries there has been a significant deterioration or no change. Nine out of the seventeen countries have grown faster post-liberalisation than pre-liberalisation but, except for Chile and Venezuela, at the expense of a wider trade or current account deficit.

Key words/Palabras clave

Latin America, Trade Liberalisation, Growth, Balance of Payments

“Trade Liberalisation in Mexico: Rhetoric and Reality” (2004), co-author A.P. Thirlwall, Banca Nazionale del Lavoro Quarterly Review, 229, June: 141-167.

Abstract/Resumen

Abstract

Trade liberalisation in Mexico started in a significant way in 1985/86, and was consolidated by the NAFTA agreement 1994. Mexico was expected to benefit in terms of increased export growth, employment, real wages, and above all, a faster rate of economic growth. In practice, there has been a divorce between rhetoric and reality. The growth of GDP post-liberalisation has been only one-half that pre-liberalisation. This paper gives three explanations. Firstly, export growth has hardly changed. Secondly, there has been a sharp increase in the propensity to import (partly related to US direct foreign investment) which has reduced the growth of GDP consistent with a sustainable balance of payments equilibrium on current account. Thirdly, liberalisation has been used as a substitute for a development strategy.

Key words/Palabras clave

Latin America, Mexico, Trade Liberalisation, Exports, Imports, Balance of Payments

“Trade Liberalisation, the Propensity to Import and Growth in Latin America” (2006),co-author A.P. Thirlwall, Journal of Post Keynesian Economics, 29(1): 41-66.

Abstract/Resumen

Abstract

This paper applies the balance of payments constrained growth model to seventeen countries of Latin America over the period 1977-2002. The crucial parameter to estimate is the income elasticity of demand for imports which is done for Latin America as a whole, as well as for individual countries. As well as estimating over the whole period, the technique of rolling regressions is also used to test whether a trend increase can be discerned as a result of trade liberalisation. A trend increase is found for Latin America as a whole and for some individual countries, and the balance of payments equilibrium growth rate is a good predictor of growth performance in nine of the seventeen countries. There is no evidence that the balance of payments equilibrium growth rate has increased in Latin America as a result of trade liberalisation.

Key words/Palabras clave

Latin America, Trade Liberalisation, Growth, Balance of Payments

“The Impact of Trade Liberalisation on Exports, Imports, the Balance of Payments and Growth: the Case of Mexico”, (2005), Journal of Post Keynesian Economics, 27 (4): 595-619.

Abstract/Resumen

Abstract

The aim of this paper is to disentangle the effects of trade liberalization during the mid-1980s from the liberalization involved in the North American Free Trade Agreement (NAFTA) on exports, imports, and the balance of trade in Mexico. The main empirical results suggest that the trade reforms during the mid-1980s had a significant effect on trade, exports, and imports; however, the effects of NAFTA, at least on exports, are negligible. Since the mid-1980s, the propensity to import has exceeded the propensity to export and this has worsened the growth rate consistent with balanced trade, which is a major explanation of the slowdown of Mexico’s growth in recent years. NAFTA has not delivered the improved growth performance that was promised by Mexico’s political leaders at the time.

Key words/Palabras clave

Balance of payments, exports, imports, Mexico, NAFTA, trade liberalization.

“Políticas de Empleo en Economías Semi-Industrializadas” (2002), co-author J. López, Revista de Economía Política, 22 (2): 102-118.

Abstract/Resumen

Abstract

The main objective of this paper is to analyze economic policy options to foster economic growth and the absorption of unemployment in the short run in open semi-industrialized economies. We take into account the existence of idle capacity, and we postulate that at least part of these capacities could be put to use in the short run, stimulating output growth even as equilibrium in the trade balance is maintained. We emphasize the necessity to combine competitiveness of the real exchange with price stability and with a fair distribution of income. We thus propose to counterbalance the negative effects of an increase in the exchange rate on workers’ purchasing power, with compensation achieved either through direct subsidies or reduction in the Value Added Tax for basic goods. With two econometric exercises carried out for Brazil and Mexico we empirically analyze the basic hypothesis of this paper.

Resumen

El objetivo principal del artículo es analizar las opciones de política económica para promover el crecimiento económico y la absorción del desempleo en el corto plazo en economías semi-industrializadas. Partimos de la base que existen capacidades ociosas, y postulamos que al menos una parte de éstas pueden utilizarse en el corto plazo, estimulando el crecimiento económico y asegurando el equilibrio en la balanza comercial. Enfatizamos la necesidad de combinar la competitividad del tipo cambio real con estabilidad de precios y una justa distribución del ingreso.  Para contrarrestar los efectos negativos de un incremento en el tipo de cambio nominal en el poder adquisitivo de los trabajadores proponemos compensaciones por medio de subsidios directos o reducciones en el Impuesto al Valor Agregado en los bienes básicos. Con dos ejercicios econométricos para Brasil y México probamos empíricamente la hipótesis del artículo.

Key words/Palabras clave

Economic growth, economic policies, semi-industrialized economies

Crecimiento económico, políticas económicas, economías semi-industrializadas

“El Impacto de la Política Comercial en el Crecimiento Económico de México”, (2005), Economía UNAM, 4, Enero-Abril: 84-93.

Abstract/Resumen

Abstract

The paper contrasts between the effects of the liberalisation on Mexico’s trade policy since the decade of the mid-nineteen eighty’s on the economic growth and the industrial and commercial policies recommended by international organisation as UNCTAD and OECD. The emphasis of the analysis is on the constraint to economic growth by the actual trade policy.

Resumen

El artículo contrasta el efecto de la liberación de la política comercial adoptada en México desde mediados de la década de los ochenta en el crecimiento económico con opciones de políticas comerciales e industriales recomendadas por organismos internacionales como la UNCTAD y la OCDE. Se enfatiza el análisis a la restricción del crecimiento económico por la política comercial que se practica en el país.

Key words/Palabras clave

Política comercial, crecimiento económico, TLCAN.

“Foreign Direct Investment, Exports and Imports in Mexico”, (2005), World Economy, 28(8): 1157-1172.

Abstract/Resumen

Abstract

This paper analyses the liberalisation of foreign direct investment (FDI) in Mexico since the late-1980s, and its relationships with exports and imports. Such a process has eased the access of multinational corporations (MNCs) to the country, which has promoted exports. However, it has also resulted in a higher import content and the displacement of local firms, which has limited Mexico’s economic development through the balance of payments constraint. The analysis is supported by the existence of linkages —bi-directional Granger causality— between exports, imports and FDI.

Key words/Palabras clave

Foreign Direct Investment-Liberalisation, Imports, Exports, NAFTA, Mexico

“Los efectos de la liberación comercial en el crecimiento económico y la balanza de pagos en América Latina” (2009), Investigación Económica, Vol. LXVIII, No. 267, Págs. 13-49.

Abstract/Resumen

Abstract

Parametric and non-parametric techniques are used to assess whether trade liberalisation has improved or deteriorated the trade-off between the balance of payments and economic growth in a group of seventeen Latin American countries during the period 1977-2002, and to estimate the overall effects of the trade reforms on economic growth. The results indicate that trade liberalisation has not relaxed a balance of payments constraint on growth in Latin American countries, because liberalisation has not improved noticeably the growth of exports and has raised the propensity to import.

Resumen

Se utilizan técnicas paramétricas y no-paramétricas para evaluar si la liberación comercial ha mejorado o empeorado la relación conflictiva entre la balanza de pagos y el crecimiento económico en un grupo de diecisiete países de América Latina durante el periodo 1977-2002, y para estimar el efecto de las reformas comerciales en el crecimiento económico de la región. Los resultados indican que la liberación comercial no ha relajado la restricción de la balanza de pagos al crecimiento económico de los países de América Latina, debido a que la liberación no ha mejorado notablemente el crecimiento de las exportaciones y ha incrementado la propensión a importar.

Key words/Palabras clave

Economic growth, Latin America, trade liberalisation, balance of payments

Crecimiento económico, América Latina, liberación comercial, balanza de pago