Abstract

CALDERON VILLARREAL, Cuauhtémoc  and  HERNANDEZ BIELMA, Leticia. Disparities in Economic Growth between China and México. Rev. mex. econ. finanz [online]. 2024, vol.19, n.3, e1000.  Epub Oct 15, 2024. ISSN 2448-6795.  https://doi.org/10.21919/remef.v19i3.1000.

The aim of this article is to apply the model of Thirlwall's simple rule to analyze the causes of the divergent equilibrium growth rates between China and Mexico. The Fully Modified OLS method by Peter C. B. Phillips and Bruce E. Hansen is used. This approach offers precise estimates for the long-term relationships between GDP and exports, addressing endogeneity and autocorrelation. Through this estimator, we obtained the equilibrium GDP growth rates and the income elasticities of import demand. It is recommended to implement industrial and trade policies in Mexico to boost its growth. A limitation is that a more detailed analysis of differentiated growth was not conducted, so it would be necessary to explore further the extended version of Thirlwall's Law. The originality of our work lies in contributing to the understanding of the disparities in economic growth between China and Mexico. In conclusion, we demonstrate the different growth capacities based on the constraints of each country's current accounts.

Keywords : Thirlwall's law; Chinese economy; Mexican economy; income elasticity of import demand; current account.

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