Homework 2

Omar Trejo - 119711 Economa Internacional I

To present the information in the following tables we will use R for rank, S for share and we will keep data conventions (i.e. product description names and trade value in $1,000 USD). The total trade values were computed by making a sum of all traded values for each year and whether they were exports or imports. The following table shows the results. 1993 $ 65,271,994.30 $ 51,886,414.86 2007 $ 281,926,513.23 $ 271,821,215.42

Total Imports Total Exports

Exercise 1
Rank the commodity groups, highest to lowest, according to their share in total exports in year 1993. Do the same for 2007. List the top 10 exported commodities of 1993 and compare their rank in 1993 with their rank in 2007. What are the top 10 exported commodities of 2007, and how does their 2007 rank compare with their 1993 rank. How has NAFTA aected the export composition of Mexico? From the tables presented below we can observe some changes in our top performers in exports. Petrol./bitum. oil, crude stayed in rst place, but a drop on most of the top performers from 1993 is shown, except Television receivers that moved from sixth to second position and Telecomms equipment nes that moved from seventh to fourth. This suggests that we either oered lower prices or produced higher quality levels than what was being produced in the US (our largest buyer) regarding these two products1 . All other products dropped. The
1 Because we are just looking at aggregate levels (no distinction between buyers) we can not nd out if our buyer composition changed, but its safe to assume that if it did, it didnt change results in a qualitative way

biggest drops were vegetables from tenth to seventeenth position, electrical distribution equipment from third to ninth position, and electrical equipment from fth to tenth. Top Exports 1993 - 253 traded products Product Description R1993 R2007 S1993 Trade Value Petrol./bitum. oil, crude 1 1 2.3858 % $ 6,485,314.05 Passenger cars etc 2 3 1.5607 % $ 4,242,558.98 Electrical distrib equip 3 9 1.0226 % $ 2,779,687.94 Motor veh parts/access 4 5 0.7408 % $ 2,013,789.06 Electrical equipment nes 5 10 0.7390 % $ 2,008,824.06 Television receivers 6 2 0.6526 % $ 1,774,013.95 Telecomms equipment nes 7 4 0.6326 % $ 1,719,531.01 Internal combust engines 8 12 0.6083 % $ 1,653,491.97 Electric circuit equipmt 9 11 0.5392 % $ 1,465,697.02 Vegetables,frsh/chld/frz 10 17 0.4513 % $ 1,226,760.96

Top Exports 2007 Product Description R1993 Petrol./bitum. oil, crude 1 Television receivers 6 Passenger cars etc 2 Telecomms equipment nes 7 Motor veh parts/access 4 UN Special Code 79 Goods/service vehicles 17 Computer equipment 13 Electrical distrib equip 3 Electrical equipment nes 5

257 traded products R2007 S2007 Trade Value 1 13.956 % $ 37,937,176.94 2 7.4597 % $ 20,277,044.74 3 6.8738 % $ 18,684,438.59 4 4.4686 % $ 12,146,614.61 5 4.3606 % $ 11,853,224.76 6 3.5948 % $ 9,771,584.01 7 3.3090 % $ 8,994,584.05 8 3.2963 % $ 8,960,075.76 9 2.8623 % $ 7,780,482.64 10 2.6859 % $ 7,301,003.39

We can nd three products that were not part of the top ten performers in 1993 and in 2007 were. These are: UN Special Code2 from seventy-ninth to sixth position, Goods/service vehicles from seventeenth to seventh position, and Computer equipment from thirteenth to eight position. This shows that although there was not a big qualitative change in the composition of top performers in exports, we did bring three performers a lot higher and the three that left the top performers (Internal combust engines, Electric circuit equipmt and Vegetables, rsh/chld/frz) did not drop too low for 2007s top export performers.
2I

could not nd out what this represents.

Exercise 2
Now do the exercise of the previous part for imports. How has NAFTA aected the import composition of Mexico? Top Imports 1993 - 260 traded products Product Description R1993 R2007 S1993 Trade Value UN Special Code 1 1 2.6616 % $ 7,503,795.20 Valves/transistors/etc 2 7 0.7980 % $ 2,249,818.88 Electric circuit equipmt 3 5 0.7011 % $ 1,976,657.02 Electrical equipment nes 4 12 0.6851 % $ 1,931,746.05 Telecomms equipment nes 5 2 0.6673 % $ 1,881,474.05 Articles nes of plastics 6 10 0.6518 % $ 1,837,822.98 Base metal manufac nes 7 11 0.6406 % $ 1,806,153.98 Electrical distrib equip 8 15 0.6192 % $ 1,745,784.06 Computer equipment 9 8 0.3847 % $ 1,084,776.96 Heavy petrol/bitum oils 10 3 0.3766 % $ 1,061,950.02 Top Imports 2007 Product Description R1993 UN Special Code 1 Telecomms equipment nes 5 Heavy petrol/bitum oils 10 Motor veh parts/access 13 Electric circuit equipmt 3 Passenger cars etc 38 Valves/transistors/etc 2 Computer equipment 9 Optical instruments nes 209 Articles nes of plastics 6 259 traded products R2007 S2007 Trade Value 1 5.8533 % $ 16,502,190.98 2 5.4530 % $ 15,373,515.11 3 4.9254 % $ 13,886,076.06 4 4.3636 % $ 12,302,190.12 5 3.5970 % $ 10,141,117.68 6 3.3470 % $ 9,436,330.28 7 2.3302 % $ 6,569,591.99 8 2.1631 % $ 6,098,386.28 9 2.1624 % $ 6,096,571.47 10 2.1243 % $ 5,989,200.42

Mexico removed four of the top import performers from 1993 to 2007: Electrical equipment nes fourth to twelfth position, Electrical distrib equip eighth to fteenth position, Base metal manuf nes seventh to eleventh position, and Articles new of plastics sixth to tenth position. Mexico also brought new top performers in imports from 1993 to 2007: Motor veg parts/access thirteenth to fourth position, Passenger cars etc thirty-eighth to sixth position, and Optical instruments nes two-hundred-ninth to ninth position. Changes were a lot more varied in imports than in exports. However, we can observe a big tendency towards importing materials for industrial purposes. It shows that we started to demand much more capital intensive goods and moved away from the maquiladoras industry. 3

Exercise 3
For each commodity group compute the percentage change in exports from 1993 to 2007. Rank them highest to lowest in terms of percentage change. What are the top 10 commodities that experienced greatest growth in exports? Now, repeat the exercise for imports. Top 10 Changes - Exports Product Description Change Cheese and curd 20,983 % Road motor vehicles nes 11,835 % Tea and mate 11,364 % Iron ore/concentrates 11,177 % UN Special Code 9,395 % Flour/meal wheat/meslin 8,316 % Pearls/precious stones 7,967 % Rice 7,950 % Butter and cheese 6,186 % Prefabricated buildings 5,775 % Top 10 Changes - Imports Product Description Change Precious metal ore/conc. 21,515,606 % Optical instruments nes 30,871 % Iron ore/concentrates 30,707 % Tobacco, manufactured 8,578 % Coal non-agglomerated 8,083 % Silk 7,125 % Coin nongold non current 3,985 % Natural gas 2,943 % Nf base metal waste nes 2,752 % Knit/crochet fabrics 2,253 % Note 1: There was a product (Uranium/thorium ore/conc) that although it was imported in 1993, it was not imported in 2007, probably due to international agreements regarding this radioactive material. Since its trade was not signicant, I removed it for this analysis. The same was done with the four products that were exported in 2007 but were not in 1993 (Barley grain, Natural gas, Nickel ores/cones/etc, and Wheat/meslin). Note 2: The top performer in imports growth percentage (Precious metal ore/conc.) probably is there due to a data error. Its value is $1.0 for 1993 and $215,157.06 for 2007. 4

Exercise 4
Make a scatter plot with share in total exports in year 1993 on the x-axis and the percentage change in exports from 1993 to 2007 on the y-axis. Interpret what you see in this graph. Compute the correlation between the share in total exports in year 1993 and the percentage change in exports from 1993 to 2007 across commodity groups.

Figure 1: Correlation: -0.084771589 Note 3: For this graph Precious metal ore/conc. was removed due to the error commented on Note 2. What we can observe in the graph is that the larger share you have from total exports, the harder it is to grow. This is a inverse relation which is given by the correlation: -0.063742571. This makes sense. We can see that those commodities that show the greatest growth are within the group of commodities that had the smaller shares from total exports. This clearly shows the shift towards these commodities. However the bulk of the exports is where you have lower share and lower growth, this implies that only a small group of commodities has shown big changes.

Exercise 5
Now do the exercise of the previous part for imports.

Figure 2: Correlation: -0.063742571 What we can observe in this graph is a similar behavior to that in the previous. We can see that theres a small number of commodities with very big changes, and the rest of the bulk has lower shares from total imports and lower growth percentages. However, this group is shows more dynamism compared to the exports group; its not as concentrated on the bottom left corner as the exports are. This tells us that we have changed our imports portfolio more than we have changed our exports portfolio. The negative correlation (-0.063742571) between shares in 1993 from total imports and growth percentage from 1993 to 2007 tells us that the less share you have from total imports, the more you are likely to grow. Its an inverse relation and its similar to what we saw with exports, but its slightly lower.