Brazil and Mexico: trade specialization and the composition of flows adjusted for relative prices (2002-2019

Abstract

This article provides a comparative analysis of the export and import structures of Brazil and Mexico between 2002 and 2019, filtering out the effects of relative price variations. The aim is to distinguish the extent to which changes in trade composition reflect structural transformations or merely conjunctural price fluctuations. To this end, trade flows were adjusted by sectoral relative prices compared to the total, allowing the isolation of volume changes from the effects of appreciation or depreciation of specific product groups. The results confirm that relative prices significantly affect the interpretation of trade specialization. In the Brazilian case, the process of regressive specialization is attenuated once the appreciation of commodities is discounted, particularly in agriculture, which, since 2017, has surpassed food, beverages, and tobacco as the main export group in the country. In Mexico, the concentration in the automotive sector becomes even more pronounced when adjusted for relative prices, since the decline in industrial prices reduces the share of the sector in current values. In both countries, imports are less sensitive to price variations, but confirm a strong dependence on intermediate and capital goods of medium-low and medium-high technological intensity, notably chemical, pharmaceutical, and metallic inputs.