It is difficult for the United States to easily replace Mexican imports, because they have a high level of complexity, in addition to the fact that geographical proximity reduces logistical costs and replacing Mexico, in addition to taking time, would imply higher costs, the financial group warned. Base.
A lower degree of complexity in a product does not mean that it can be developed at low cost, but rather that it can be reproduced more easily around the world; In contrast, the manufacturing of highly complex products requires sustained investment for its development along with the development of other complementary highly complex products and the necessary human capital.
In an analysis, the financial institution indicated that Mexico is the Latin American economy with the highest degree of economic complexity, followed by Costa Rica, which is in position 50 in the ranking. The only three emerging economies that surpass Mexico are Hungary in 13th position, China in 18th and Romania in 20th.
This implies that Mexico’s exports are more complex than most emerging economies (except those already mentioned) and show a structure similar to those of advanced economies such as Finland in position 19, France in position 22 and Israel in position 22. position 23.
The first 10 countries in degree of economic complexity are: Japan, South Korea, Switzerland, Singapore, Taiwan, Germany, Czech Republic, Austria, Slovenia and the United Kingdom. Together, these countries with high economic complexity account for only 23.11% of total imports from the United States due to their high labor costs, high transportation costs and/or long delivery times.
Thus, Base indicated, Mexico competes directly with Germany and Japan, countries with high economic complexity, in the manufacturing of vehicles, industrial machinery and electrical equipment and machinery, but the United States imports less than 5% of its total imports from Germany and Japan.
He recalled that the United States has a moderate concentration in the source of its imports, since 40% of its purchases from abroad are made from 3 countries (Mexico, China and Canada) and the percentage represented by Latin American economies is only 4.42%.
Furthermore, Latin American imports differ significantly from Mexican imports as they are mainly low-complexity products, concentrated in the energy, agri-food and processed metals sectors, industries strongly related to the primary sector and mining activity.
In this context, if the United States wanted to undertake a process of import substitution seeking to isolate Mexico, it would face problems, among which emerging economies stand out. Only China has a degree of economic complexity and sufficient capacity to replace Mexico, but this is contrary. to the national security efforts of the United States, which seeks to reduce China’s involvement and limit its access to strategic sectors.
Thus, the financial institution estimated that it would take 13 emerging economies (excluding China) and some advanced economies to replace what the United States imports from Mexico, but this substitution of imports from Mexico would result in higher costs for the United States, especially logistics. .
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