Trade shares are also consistent with intuition about Mexico's comparative
advantage, with almost half (44 percent) of exports from primary sectors and
87 percent of impons in manufacturing. One conspicuous but similarly intuilive difference is the ratio of labor to capital value added, which in some sectors
is an order of magnitude less than in the more affluent countries. Mexico is
generally more trade dependent overall than the United States but less so than
Canada, with 12 percent exports in gross output and 24 percent impons in
total demand. The sectoral patterns of this dependence vary considerably from
the other two countries, with much greater primary expon dependence and
more variation in manufacturing impon dependence.
Although Mexico exhibits U.S. bilateral trade dependence comparable to
Canada, its composition is quite different. The United States has an even more
dominant position in selected Mexican manufacturing sectors than in Canadian
ones, with a more than 80 percent share in six Mexican import markets and nine Mexican expon markets. Overall, 81 percent of Mexican manufacturing
exports went to the United States in 1988. Again, this implies that trade diversion as a result of increased economic integration is more likely within,
rather than from outside, the North American region.