Is Mexico A Lumpy Country? / Andrew B. Bernard, Raymond Robertson, Peter K. Schott.

Format:

Book

Author/Creator:

Bernard, Andrew B.

Contributor:

National Bureau of Economic Research.

Robertson, Raymond.

Schott, Peter K.

Series:

Working Paper Series (National Bureau of Economic Research) no. w10898.

NBER working paper series no. w10898

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2004.

Summary:

Mexico's experience before and after trade liberalization presents a challenge to neoclassical trade theory. Though labor abundant, it nevertheless exported skill-intensive goods and protected labor-intensive sectors prior to liberalization. Post-liberalization, the relative wage of skilled workers rose. Courant and Deardorff (1992) have shown theoretically that an extremely uneven distribution of factors within a country can induce behavior at odds with overall comparative advantage. We demonstrate the importance of this insight for developing countries. We show that Mexican regions exhibit substantial variation in skill abundance, offer significantly different relative factor rewards, and produce disjoint sets of industries. This heterogeneity helps to both undermine Mexico's aggregate labor abundance and motivate behavior that is more consistent with relative skill abundance.

Notes:

Print version record

November 2004.