Industrial Organization and Comparative Advantage in Mexico's Manufacturing Trade

This paper examines some features of Mexico’s foreign trade in manufactures from the perspective of recent developments in international trade theory, while bringing some characteristics of Mexico’s industrial organization into the analysis. After a brief review of the applied literature on Mexico’s foreign trade, the paper develops a taxonomy of manufacturing industries, according to the nature and volume of its foreign trade. This exercise, which relies primarily on the distinction between intraand inter-industry trade, provides a framework for an analysis of the relationships between trade flows, economies of scale, and market structure conditions. This analysis is based on Industrial Census data for 1975 and 1980, and on foreign trade data for the 1978-1983 period. The final section summarizes the main research findings and conclusions, and an appendix explains in detail the methods and data sources.