Trade liberalization, export orientation and employment in Argentina, Brazil and Mexico
This paper discusses the new export-oriented development strategy adopted by the countries in the late 1980s and early 1990s, which involved trade liberalization, regional trade agreements and the curtailment of government industrial policy. In particular, this paper assesses the outcome of this policy shift on trade specialization as well as the labour market, in particular on employment and wages. The study finds that in general trade liberalization and regional integration did not have the expected strong positive impact on production or employment during the period of analysis. Instead, there was a steep rise in imports and little export dynamism. Exchange rate appreciation contributed to the rise in imports while hurting exports which, coupled with a lack of public support to firms during the adjustment process, meant that export growth, measured in quantity or by type of exports, was not as dynamic as had been foreseen. Only Mexico experienced an export boom in manufacturing production and employment due to growth in the maquiladora sector. Argentina and Brazil, on the other hand, decreased their specialization in dynamic products vis-à-vis the world market, mainly maintaining their specialization in primary and semi-processed primary products. Moreover, the exports of more sophisticated products, in particular from the maquiladora industry, did not lead to value chain upgrading, since the import content of exports also rose significantly. With the exception of the maquiladora industry, restructuring in manufacturing was not particularly beneficial to job growth as there were few new production plants and the job-creating sectors were of low labour intensity.
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