Production fragmentation, foreign trade and structural complexity: a comparative analysis of Brazil and Mexico

Abstract

Starting in the 1980s, Brazil and Mexico adopted diverging trade and production strategies, which had significant effects on their respective production and trade structures. This study investigates how the two countries’ different patterns of trade specialization affected the complexity of their respective production structures between 1995 and 2011. Although the foreign trade profiles of Brazil and Mexico differ mainly in their export structures, the processes of trade liberalization and integration into global value chains made the network of interrelationships between the different sectors less complex. Since these are Latin America’s two largest economies, a reduction in the complexity of their production structures not only has repercussions on the dynamics of their respective national economies, but also affects those of other countries in the region.