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Thi s article evaluates several of the determinants of Mexican manufacturing exports, using two complementary econometric methods: a structural arima model, which makes it possible to estimate elasticities; and a generalized var model, which provides a fully dynamic perspective by estimating impulse response functions. As some of the findings are robust to changes in the econometric methodology used, the article reaches the following conclusions. First, manufacturing exports are positively related to labour productivity and external demand; so the adverse effects of an international recession on Mexican exports could, to some extent, be offset by raising worker productivity. Second, real exchange-rate depreciation does not increase manufacturing exports, but actually reduces them, at least in the short run. These findings are consistent with the idea that a real depreciation not only affects demand, but also generates strong supply-side effects. This article evaluates several of the variables that determine Mexico's manufacturing exports, using two complementary econometric methods: a structural Autoregressive Integrated Moving Average (arima) model to estimate elasticities; and a Generalized Vector Autoregressive (gvar) model, which makes it possible to estimate the dynamic responses of manufacturing exports to different types of shock. 1 Accordingly, both univariate and multivariate time series analyses are used to obtain two different perspectives on the factors driving manufacturing exports.Several previous empirical studies have shown that exports are influenced not only by relative prices and external demand, but also by domestic demand and supply-side factors. In that context, this paper concludes that increased labour productivity and external demand expansions both have a significant impact on the growth of manufactured exports. Moreover, the evidence provided here suggests that a real exchange-rate depreciation could reduce the volume of exports in the short term, rather than increase it. A plausible explanation for this atypical result is that real currency depreciation generates two opposing effects, especially in developing countries: it makes their exports cheaper in terms of foreignThe author gratefully acknowledges financial support for this research from the National Science and Technology Council (conacyt), and the comments and suggestions made by an anonymous referee. 1 The gvar method produces empirical evidence that is independent of the ordering of the equations, which is a major improvement over traditional recursive var models. currency; but it also raises the local-currency cost of imported intermediate inputs. The net effect on Mexico's international competitiveness appears to be negative, at least in the short term. Lastly, we present empirical results showing that strategic investment and production decisions are driven by the firm's desire to grow its exports.An important economic-policy implication of this is that the adverse effects of an international recession on Mexican exports...

This paper makes use of three econometric methods and three time intervals to evaluate the long‐term effects of several key variables on Mexican manufacturing exports to the US. The evidence across econometric techniques and sample periods systematically indicates that: (i) a real depreciation of the yuan‐dollar exchange rate reduces Mexican manufacturing exports by lowering the price of Chinese goods in the US market; (ii) a depreciation of the peso‐dollar real exchange rate generates a strong supply‐side effect due to the high import content of Mexican manufacturing exports, which ultimately leads to lower (rather than higher) sales in the US; and (iii) external demand and labour productivity are positively related to manufacturing exports, whereas real wages are negatively related. Therefore, a falling external demand for Mexican manufacturing products or a real depreciation of the Chinese currency could, to some extent, be offset by increasing labour productivity faster than wages. These findings reflect two fundamental problems of the Mexican economy: (i) low investment in high‐quality formal instruction and proper training programs, which gives rise to severe bottleneck points for faster labour productivity growth and (ii) excessive reliance of the export‐oriented manufacturing industry on foreign suppliers of intermediate inputs.