The emergence of China in nafta: effects on the Intra-industrial trade of Mexico

Abstract

One of the strongest trends of the current globalization process is the development of intra-industry trade, which takes place outside the conventional theoretical framework. This paper focuses on this phenomenon in the particular case of Mexico, in the context of the North American Free Trade Agreement (nafta), where the production structure of its members has changed significantly with the trade openness according to the specific features of each country. The case of Mexico shows that the importance of foreign trade represents about two-thirds of the product (twice the 1990 size share), changing significantly the composition of exports. In this context, phenomena as intra-industry and intra-firm trade emerge, revealing the internationalization of production chains. However, China has become a major player in World trade and the region of North America has not been an exception. In fact, China has strongly irrupted in the nafta area, increasing its share as a supplier of goods despite not having signed agreements with these countries. This work aims at analysing the direction and depth of these trends and their impact on the intra-industry integration of Mexico