Relationship between light automobile imports and Mexico's economic growth, 1994-2019

Abstract

The article seeks to obtain empirical evidence about whether it is economic growth that determines the increase in imports of light automobiles in Mexico, or vice versa, for the period 1994-2019. It seeks to contrast the hypotheses "Imports-led Growth (ILG)", and the "Growth-driven import (GDI)". For which a model of simultaneous equations is estimated, where the endogenous variables were the Gross Domestic Product and imports of light automobiles; while the default ones: the real peso / dollar exchange rate, real inflation, as well as total production, exports and the total sale of light vehicles, for which the two-stage least squares method (MC2E) was used. The results obtained allowed us to observe that the ILG hypothesis was fulfilled, indicating that it was the imports of light automobiles that influenced the economic growth of the country.