A review of Mexico’s participation in global value chains
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.
Published on May 07, 2024
In series:OECD Economics Department Working Papersview more titles