An Empirical Estimation of the Level of Intra-Industry Trade between Mexico and the United States

Abstract

This chapter presents an evaluation of the level of intra-industry trade between Mexico and the United States. The calculated indexes of intraindustry trade indicate a rapid increase in this type of trade during the 1982–90 period. Additionally, the current level of intra-industry trade between the two nations is quite high when compared with similar indexes of other nations. These results help to explain the apparent ease with which the United States adjusted to increased Mexican imports during the 1980s. Furthermore, the high level of intra-industry trade indicates that after NAFTA has been implemented there should be no major dislocation of productive activities in either of these countries as a result of the expansion in trade.

The authors wish to acknowledge gratefully the research and computation assistance provided by Lourdes Hernández. A previous version of this chapter was presented at the November 1991 Southern Economic Association meetings in Nashville.