Competition and Competitiveness between Mexican and Chinese Exports to the United Sates Market: New Evidence

Abstract

The following text analyzes grosso modo the evolution and structure of Mexican and Chinese exports to the United States’ market during the last two decades, with special attention paid to the fact that China became the principal provider of exports to the United States market. Resulting in Mexico being displaced from the second place it had achieved during the period 2000-2002. The objective of this investigation is to discover which sectors and products are involved in said displacement of Mexico by China. In addition, this took place even though China has no free trade agreement with the United States, as in the case of Mexico, that has one since 1994. This situation allows us to conclude that China’s success is due to certain visible comparative advantages, which have reacted more favorably to the dynamic changes that are taking place in international trade at this moment throughout the world. We have used Balassa’s Specialization Index in order to prove our hypothesis in relation to Mexico’s displacement by China, but also show, at the same time, that despite China’s gains from 2001 on in certain sectors and its position as the most important supplier to the United States’ market since 2003. Mexico has managed to lessen that disadvantage during the last few years, and that this tendency could continue until the end of the present decade; a situation that in the short term will result in its recuperation as far as participation in the United States’ market is concerned.