Premium
Government Policy and the Export Performance of the Mexican Automobile Industry
Author(s) -
TRUETT DALE B.,
TRUETT LILA J.
Publication year - 1994
Publication title -
growth and change
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.657
H-Index - 55
eISSN - 1468-2257
pISSN - 0017-4815
DOI - 10.1111/j.1468-2257.1994.tb00146.x
Subject(s) - automotive industry , government (linguistics) , position (finance) , production (economics) , promotion (chess) , economics , international trade , business , industrial policy , public policy , economy , economic growth , engineering , finance , political science , macroeconomics , politics , philosophy , linguistics , law , aerospace engineering
This paper presents a historical perspective of growth of the Mexican automobile industry, focusing on the changing position of Third‐World producers within the global motor vehicle industry. Both the impact of Mexican government policies directed toward increasing international competitiveness and that of adjustments made by transnational corporations to changes in technology and production methods are reviewed. Finally, a demand function that relates the proportion of the industry output that is exported to relative producer prices, Mexican and U.S. income, and government policy variables is estimated. The results of that analysis are consistent with the hypotheses that Mexican automotive sector exports are significantly related to (1) relative Mexico/U.S. producer prices, (2) income in the United States, and (3) changes in Mexican government export promotion policies initiated in 1983. These specific results, coupled with the global changes taking place in the industry, lead to the conclusion that Mexico can be expected to continue on its course toward fuller integration into the world motor vehicle industry as a producer of both finished vehicles and parts. While this would be a probable scenario even in the absence of the North American Free Trade Agreement, the Agreement is likely to accelerate the growth of internationally competitive automotive sector production in Mexico.