Trade between advanced and underdeveloped countries: a Pasinetti model – Mexico–US 2013–2018

In this work, we construct an empirical model based on Pasinetti’s writings to analyze trade between an advanced country, the United States, and an underdeveloped country, Mexico. This model utilizes actual data from the US and Mexico. Our findings show that Pasinetti’s trade theories regarding advanced and underdeveloped countries fully apply to the US–Mexico case during the period 2013–2018. Consequently, his theses about this type of trade are confirmed: Mexico’s terms of trade with the US worsen; there are no gains from trade in terms of productivity for Mexico, but leakages of productivity gains from Mexico to the US.