Exports, imports, economic growth, causality, cointegration

This research analyses the short-run and long-run relationship between exports, imports, labour, capital and gross domestic product of Mexico from 2002 to 2024 by means of a neoclassical framework under an autoregressive distributed-lagged error correction model. We reveal that these series are cointegrated. The empirical examination applies several diagnostic tests to analyse the error terms and the appropriateness of the model specification. It was found a long-run convergence among the observed variables providing evidence in the long-run that imports and capital positively influence output net of exports and that exports and labour have negative effects on such variable. In the short-run, estimates showed that exports have a positive impact on GDP net of exports whereas imports and capital display negative coefficients. The findings must also be interpreted in light of Mexico’s trade liberalization strategy and its network of free trade agreements. It is important to consider that the 2008 financial crisis and the COVID-19 pandemic, exposed vulnerabilities in Mexico’s dependence on external demand. These results raise questions about the sustainability of an export-oriented growth model. JEL Classification: F1, F4, O4, C220, C32, C18.

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