Penélope Pacheco-López

The effect of trade liberalization on exports, imports, the balance of trade, and growth: the case of Mexico

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 Mexicos growth in recent years. NAFTA has not delivered the improved growth performance that was promised by Mexicos political leaders at the time.

Trade Liberalisation and the Trade‐Off Between Growth and the Balance of Payments in Latin America

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 article we consider whether trade liberalisation in 17 countries of Latin America has improved the trade‐off between gross domestic product (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 17 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.

Has Trade Liberalisation in Poor Countries Delivered the Promises Ecpected

Este trabajo revisa la evidencia del impacto de la liberalizacion comercial sobre el desempeno economico de paises pobres en desarrollo con respecto a la reduccion de la pobreza, la distribucion del ingreso dentro y entre los paises, el comercio y la balanza de pagos, y el crecimiento economico, y encuentra que la liberalizacion no ha proporcionado los beneficios esperados. La teoria economica, asi como la evidencia historica y contemporanea, proporcionan argumentos para la proteccion de las actividades industriales en paises en desarrollo. / The paper reviews the evidence of the impact of trade liberalisation on the economic performance of poor developing countries with respect to poverty reduction, the distribution of income within countries, the distribution of income between countries, trade and the balance of payments, and economic growth, and finds that liberalisation has not delivered the benefits expected. Economic theory, and the historical and contemporary evidence, all provide arguments for protection of industrial activities in developing countries.