Nearshoring: Possible Scenarios of its Size and Impact on Mexico´s Economy

We present an analytical framework and evidence that characterize the historical patterns of Mexico’s manufacturing exports and its participation in Global Value Chains (GVCs). We use this framework to guide an empirical analysis in which we identify sectors with the highest export potential as a result of nearshoring. We also estimate the orders of magnitude of the potential impacts of this process on Mexico´s manufacturing exports and GDP. Finally, we discuss factors that could have an influence on the size of these effects, including an elastic supply of skilled labor, an institutional framework that promotes contract enforcement, cost effective and reliable energy supply, and strong and widespread connectivity through transportation and communication networks.