Trade Complementarity and the Balance of Payments Constraint Hypothesis: A New Free Trade Agreement between Mexico and South Korea
Market diversification is one of the keys to success in the new era of world trade. Highly competitive countries have accomplished positive and sustained growth rates by not depending on a single market for their exports and imports. In Mexico, on the contrary, 80% of exports and 45% of imports conc...
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| Format: | Article |
| Language: | English |
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MDPI AG
2020-10-01
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| Series: | Mathematics |
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| Online Access: | https://www.mdpi.com/2227-7390/8/10/1708 |
| _version_ | 1797551812502355968 |
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| author | Luis Quintana-Romero Nam Kwon Mun Roldán Andrés-Rosales José Álvarez-García |
| author_facet | Luis Quintana-Romero Nam Kwon Mun Roldán Andrés-Rosales José Álvarez-García |
| author_sort | Luis Quintana-Romero |
| collection | DOAJ |
| description | Market diversification is one of the keys to success in the new era of world trade. Highly competitive countries have accomplished positive and sustained growth rates by not depending on a single market for their exports and imports. In Mexico, on the contrary, 80% of exports and 45% of imports concentrate in the United States. The South Korean market represents an opportunity for the Mexican economy, as the relationship between the two countries has strengthened in recent decades. This opportunity would promote greater economic growth for both countries if they reached a Free Trade Agreement, as we show in this work. The aim of this research is to assess the complementarity between these countries and estimate their external long-term equilibrium using the Thirlwall trade restriction model. Results confirm the existence of trade complementarity between the two economies and show that these are able to achieve long-term equilibrium in the external sector. Additionally, the Mexican economy would not face balance of payment constraints for growth when trading with South Korea, as it currently does with the United States. |
| first_indexed | 2024-03-10T15:50:19Z |
| format | Article |
| id | doaj.art-04320a31a3384e3da01bb0d861ea2951 |
| institution | Directory Open Access Journal |
| issn | 2227-7390 |
| language | English |
| last_indexed | 2024-03-10T15:50:19Z |
| publishDate | 2020-10-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Mathematics |
| spelling | doaj.art-04320a31a3384e3da01bb0d861ea29512023-11-20T16:02:04ZengMDPI AGMathematics2227-73902020-10-01810170810.3390/math8101708Trade Complementarity and the Balance of Payments Constraint Hypothesis: A New Free Trade Agreement between Mexico and South KoreaLuis Quintana-Romero0Nam Kwon Mun1Roldán Andrés-Rosales2José Álvarez-García3Department of Economics, Facultad de Estudios Superiores Acatlán UNAM, Estado de Mexico 53150, MexicoDepartment of Latin American Studies, GSIAS, Hankuk University of Foreign Studies, Seoul 130-791, KoreaDepartment of Administration, Facultad de Estudios Superiores Cuatitlán UNAM, Estado de Mexico 54714, MexicoFinancial Economy and Accounting Department, Faculty of Business, Finance and Tourism, University of Extremadura, 10071 Cáceres, SpainMarket diversification is one of the keys to success in the new era of world trade. Highly competitive countries have accomplished positive and sustained growth rates by not depending on a single market for their exports and imports. In Mexico, on the contrary, 80% of exports and 45% of imports concentrate in the United States. The South Korean market represents an opportunity for the Mexican economy, as the relationship between the two countries has strengthened in recent decades. This opportunity would promote greater economic growth for both countries if they reached a Free Trade Agreement, as we show in this work. The aim of this research is to assess the complementarity between these countries and estimate their external long-term equilibrium using the Thirlwall trade restriction model. Results confirm the existence of trade complementarity between the two economies and show that these are able to achieve long-term equilibrium in the external sector. Additionally, the Mexican economy would not face balance of payment constraints for growth when trading with South Korea, as it currently does with the United States.https://www.mdpi.com/2227-7390/8/10/1708international tradeexportsimportsThirlwall lawcointegrationeconomic growth |
| spellingShingle | Luis Quintana-Romero Nam Kwon Mun Roldán Andrés-Rosales José Álvarez-García Trade Complementarity and the Balance of Payments Constraint Hypothesis: A New Free Trade Agreement between Mexico and South Korea Mathematics international trade exports imports Thirlwall law cointegration economic growth |
| title | Trade Complementarity and the Balance of Payments Constraint Hypothesis: A New Free Trade Agreement between Mexico and South Korea |
| title_full | Trade Complementarity and the Balance of Payments Constraint Hypothesis: A New Free Trade Agreement between Mexico and South Korea |
| title_fullStr | Trade Complementarity and the Balance of Payments Constraint Hypothesis: A New Free Trade Agreement between Mexico and South Korea |
| title_full_unstemmed | Trade Complementarity and the Balance of Payments Constraint Hypothesis: A New Free Trade Agreement between Mexico and South Korea |
| title_short | Trade Complementarity and the Balance of Payments Constraint Hypothesis: A New Free Trade Agreement between Mexico and South Korea |
| title_sort | trade complementarity and the balance of payments constraint hypothesis a new free trade agreement between mexico and south korea |
| topic | international trade exports imports Thirlwall law cointegration economic growth |
| url | https://www.mdpi.com/2227-7390/8/10/1708 |
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