| Abstract: |
Improved competitiveness is at the top of the agenda for Mexico as it moves to
leverage economic progress made over the past decade. The authors evaluate the
impact of changes in trade facilitation measures on trade for main industrial
sectors in Mexico. They use four indicators of trade facilitation: port
efficiency, customs environment, regulatory environment, and e-commerce use by
business (as a proxy for service sector infrastructure). The authors use
gravity model results to consider how much trade among countries might be
increased under various scenarios of improved trade facilitation. They follow
a simulation strategy that uses a formula to design a unique program of reform
for each country in the sample, and apply it to the case of Mexico. The
formula brings the below-average countries in the group half-way to the
average for the entire set of countries. After simulating these improvements
in trade facilitation in all four areas, the authors find that the total
increase in trade flow in manufacturing goods is estimated to be $348.2
billion (about 7.4 percent of total world trade). The analysis indicates that
Mexico has a large scope for trade promotion from trade facilitation reform:
overall increments from domestic reforms are expected to be on the order of
$31.8 billion, equivalent to 22.4 percent of total Mexican manufacturing
exports for 2000-03. On the imports side, these figures are $17.1 billion and
11.2 percent, respectively. In total exports as well as in textiles, increases
in exports result from improvements in port efficiency and the regulatory
environment (that is, the perception of corruption). In turn, exports of
transport equipment are expected to get a greater increment from improvements
in port efficiency, whereas exports of food and machinery seem to be more
related to improvements in the regulatory environment. On the imports side,
Mexican improvements in port efficiency appear to be the most important
factor, although for imports of transport equipment improvements in service
sector infrastructure are also of relative importance. |