Global Value Chain Participation of Mexico: Preliminary consideration to its upgrading

Abstract

This article explores the trend and characteristics of Global Value Chain （GVC） participation of Mexico over the past 30 years and reviews the existing literatures on its upgrading. Using international trade data, Mexico’s export structure has become more sophisticated over the past 35 years, moving from primary products to medium- and high-technology manufactures. However, using Trade in Value-Added data, it became clear that the domestic value-added content of Mexico’s export of “transport equipment” and “computer, electronic and electrical equipment” is quite low, when we compare with the other sectors of Mexico as well as the same sectors of the other countries. While GVC participation stagnated globally after the international financial crisis, Mexico continued to increase its GVC participation even in the late 2010s. This was contributed by the fact that the manufacturing sector increased its “Pure Backward Participation”, typically represented by processing and assembly in GVC-related trade during this period. Most of the existing literatures related to the upgrading of GVC of Mexico are case studies focusing on specific sectors, regions or firms, so it is difficult to view the upgrading as economy-wide phenomenon.