Trade Liberalisation and Export Variety: A Comparison of Mexico and China

This paper studies how industry export variety can be constructed and empirically relates trade liberalisation to the expansion of export variety. We document the expansion in export varieties from Mexico due to NAFTA. We also investigate the growth in export variety from China over 1990–2001, and compare those findings to Mexico. Among other findings, we show that the expansion of China's export variety due to the fall of US tariffs has caused an adverse market competition effect on the export variety from Mexico.