Economic cointegration of the North American agricultural sector

Resumen

Objective: To determine if the Mexican, Canadian, and American agricultural industries are cointegrated.

Methodology: Six cointegration tests were carried out between the Mexican, Canadian, and American agricultural, forestry, fishing, and hunting industries, as well as the Mexican animal husbandry and exploitation sector. The USA was the independent variable in all cases.

Results: The Mexican sector, with an α of 5% (with and without trend) is not cointegrated with the USA and Canada, while Canada and the USA, with an α of 5% (with and without trend) are cointegrated.

Study Limitations/Implications: The agricultural sector of the three countries were not analyzed separately and the Engle-Granger causality test was not used. Although some products from Mexico's agricultural sector have managed to make inroads in the USA and Canada, further advances are still possible. Therefore, there are areas of improvement for Mexican products. Likewise, NAFTA and the USMCA/CUSMA have failed to achieve their objective of cointegrating the agricultural sectors of the three nations.

Conclusions: The Mexican sector was not cointegrated with the American and Canadian sectors during the analysis period —i.e., the Mexican sector is not influenced by and does not have the same long-term behavior (with delays) than the USA and Canadian sectors. However, the Canadian sector is cointegrated with the USA sector —i.e., the Canadian sector is influenced and has the same long-term behavior than the USA sector.