economy and politics

Is there already an impact of nearshoring on Mexico's GDP? This says an analysis

Is there already an impact of nearshoring on Mexico's GDP?  This says an analysis

According to the publication “Nearshoring: Possible scenarios of its size and impact on Mexico's economy” by the Georgetown Institute of the Americas, after an analysis of several factors such as the trade war between the United States and China, the covid pandemic, 19 and the post-pandemic cycle, as well as the potential magnitude of the effects of relocation on sectoral exports and production in Mexico, possible nearshoring processes that may be underway are identified.

Daniel Chiquiar and Martín Tobal, authors of the article, indicate that this figure (1%) reflects the effects of the increase in exports in industries such as the manufacturing of computer equipment and peripherals, beverages, semiconductors and other electronic components, and the manufacturing of communications.

“Anecdotal and indirect evidence suggests that the nearshoring process is already occurring in Mexico. Demands for industrial space and labor on the Mexican side of the border region have shown significant increases in a context of significant increase in the utilization of capacity,” the document states.

Looking ahead, the effect of nearshoring may be greater, because they project an overall increase of around 2% of Mexico's GDP.

This figure is of an order of magnitude comparable to existing estimates on the effect of the North American Free Trade Agreement (NAFTA) on the Mexican economy.

The authors specify that these figures should be taken as an approximation of the possible order of magnitude of the effects of nearshoring on the Mexican economy, but not as a precise projection.

They explain that the estimates are based on the assumption that Mexico achieves a greater share of domestic value added in its exports in the following years and, especially, that it expands its productive capacity in the sectors benefited by the relocation of companies to Asia.

It will also depend on the availability of skilled labor in the economy.

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