Journal Article

Mexico’s Growing Role in the Auto Industry Under NAFTA: Who Makes What and What Goes Where

Abstract: In this article, we explore the impact of NAFTA on Mexico?s motor vehicle industry?specifically, on Mexico?s integration into North America?s automotive industry and the subsequent increase in intra-industry trade in automobiles.5 The auto industry has undergone dramatic changes over the past 20-plus years. First, we provide a brief summary of the history of auto production and related trade policies in Mexico before NAFTA. Then we provide a detailed analysis of Mexico?s light vehicle production and exports from 1990 through 2016. Our analysis shows how Mexico has become an integral part of North America?s motor vehicle industry. In addition to aggregated industry-wide statistics, we are able to draw on data that identify the specific country of sale for vehicles produced in Mexico. These data are available on an annual basis from 2005 through 2014. Finally, we discuss how the observed trends in Mexico?s light vehicle production and trade have affected the spatial distribution of auto production within Mexico and across North America. We show that as in the United States, the motor vehicle industry has agglomerated in Mexico.

Keywords: Mexico; automotive industry: NAFTA;

Bibliographic Information

Provider: Federal Reserve Bank of Chicago

Part of Series: Economic Perspectives

Publication Date: 2017

Issue: 6

Pages: 1-29