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North American Economic Integration and Industry Location

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Author Info
Gordon H. Hanson

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Abstract

Does regional economic integration affect the location of economic activity inside countries? In this paper, I discuss recent academic literature on whether the movement towards free trade in North America has influenced the spatial organization of production in Canada, Mexico, or the United States. In Mexico, closer economic ties with the United States appear to have contributed to a contraction of employment in the Mexico City manufacturing belt, a rapid expansion of manufacturing employment in northern Mexico, and an increase in the wage premia paid to skilled workers. The effects of economic integration on industry location in Canada and the United States seem to have been much weaker. On exception to this finding is U.S. cities on the Mexican border, whose employment growth is strongly positively correlated with export production in neighboring Mexican regions. I also discuss implications of a possible hemispheric free trade agreement.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6587.

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Date of creation: Jun 1998
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Publication status: published as Oxford Review of Economic Policy, Vol. 14 (1998): 30-44.
Handle: RePEc:nbr:nberwo:6587

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Find related papers by JEL classification:
F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

References listed on IDEAS
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  1. Fujita, Masahisa & Thisse, Jacques-Francois, 1996. "Economics of Agglomeration," Journal of the Japanese and International Economies, Elsevier, vol. 10(4), pages 339-378, December. [Downloadable!] (restricted)
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  2. Ciccone, Antonio & Hall, Robert E, 1996. "Productivity and the Density of Economic Activity," American Economic Review, American Economic Association, vol. 86(1), pages 54-70, March. [Downloadable!] (restricted)
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  3. Puga, Diego & Venables, Anthony J., 1995. "Preferential Trading Arrangements and Industrial Location," CEPR Discussion Papers 1309, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  4. Krugman, Paul R & Venables, Anthony J, 1995. "Globalization and the Inequality of Nations," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 857-80, November. [Downloadable!] (restricted)
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  5. Puga, Diego, 1999. "The rise and fall of regional inequalities," European Economic Review, Elsevier, vol. 43(2), pages 303-334, February. [Downloadable!] (restricted)
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  6. Hanson, Gordon H, 1997. "Increasing Returns, Trade and the Regional Structure of Wages," Economic Journal, Royal Economic Society, vol. 107(440), pages 113-33, January. [Downloadable!] (restricted)
  7. Hanson, Gordon H, 1996. "Localization Economies, Vertical Organization, and Trade," American Economic Review, American Economic Association, vol. 86(5), pages 1266-78, December. [Downloadable!] (restricted)
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  8. Leonard K.Cheng & Yum K. Kwan, 1998. "What Are The Determinants of The Location of Foreign Direct Investment? The Chinese Experience," Finance Working Papers 174, East Asian Bureau of Economic Research. [Downloadable!]
  9. Hanson, Gordon H., 1998. "Regional adjustment to trade liberalization," Regional Science and Urban Economics, Elsevier, vol. 28(4), pages 419-444, July. [Downloadable!] (restricted)
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  10. Krugman, Paul & Elizondo, Raul Livas, 1996. "Trade policy and the Third World metropolis," Journal of Development Economics, Elsevier, vol. 49(1), pages 137-150, April. [Downloadable!] (restricted)
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  11. Glaeser, Edward L & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1992. "Growth in Cities," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1126-52, December. [Downloadable!] (restricted)
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    • Edward L. Glaeser & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1991. "Growth in Cities," NBER Working Papers 3787, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  12. Guy Dumais & Glenn Ellison & Edward Glaeser, 1997. "Geographic Concentration as a Dynamic Process," NBER Working Papers 6270, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  13. Freeman, Richard B, 1995. "Are Your Wages Set in Beijing?," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 15-32, Summer. [Downloadable!] (restricted)
  14. Henderson, Vernon & Kuncoro, Ari & Turner, Matt, 1995. "Industrial Development in Cities," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 1067-90, October. [Downloadable!] (restricted)
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  15. Rauch James E., 1993. "Productivity Gains from Geographic Concentration of Human Capital: Evidence from the Cities," Journal of Urban Economics, Elsevier, vol. 34(3), pages 380-400, November. [Downloadable!] (restricted)
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  16. Rauch, James E, 1991. "Comparative Advantage, Geographic Advantage and the Volume of Trade," Economic Journal, Royal Economic Society, vol. 101(408), pages 1230-44, September. [Downloadable!] (restricted)
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  17. D Puga & G Ottaviano, 1997. "Agglomeration in a global Economy: A Survey," CEP Discussion Papers 0356, Centre for Economic Performance, LSE. [Downloadable!]
  18. Venables, Anthony J, 1996. "Equilibrium Locations of Vertically Linked Industries," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(2), pages 341-59, May.
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  19. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June. [Downloadable!] (restricted)
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  20. Gordon H. Hanson, 1998. "Market Potential, Increasing Returns, and Geographic Concentration," NBER Working Papers 6429, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  21. Feenstra, Robert C. & Hanson, Gordon H., 1997. "Foreign direct investment and relative wages: Evidence from Mexico's maquiladoras," Journal of International Economics, Elsevier, vol. 42(3-4), pages 371-393, May. [Downloadable!] (restricted)
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  22. Hanson, Gordon H., 1996. "Economic integration, intraindustry trade, and frontier regions," European Economic Review, Elsevier, vol. 40(3-5), pages 941-949, April. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Mendoza, Jorge Eduardo, 2003. "Manufacturing specialization and urban aglommeration in the largest cities of Mexico," MPRA Paper 2854, University Library of Munich, Germany, revised 2003. [Downloadable!]
  2. Andres Rodriguez-Pose & Nicholas Gill, 2004. "How does trade affect regional inequalities?," ERSA conference papers ersa04p478, European Regional Science Association. [Downloadable!]
  3. Kaplan, David & Martinez, Gabriel & Robertson, Raymond, 2005. "What Happens to Wages After Displacement?," MPRA Paper 3079, University Library of Munich, Germany. [Downloadable!]
  4. Kyoko Hirose, 2005. "Migration and agglomeration with knowledge spillovers," Discussion Papers in Economics and Business 05-16, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP). [Downloadable!]
  5. Lapo Valentina, 2003. "Spatial distribution of investment in Russia: the effect of agglomeration," EERC Working Paper Series 01-087e, EERC Research Network, Russia and CIS. [Downloadable!]
  6. Nicole Madariaga & Sylvie Montout & Patrice Ollivaud, 2004. "Regional convergence, trade liberalization and agglomeration of activities : an analysis of NAFTA and MERCOSUR cases," Cahiers de la Maison des Sciences Economiques bla04069, Université Panthéon-Sorbonne (Paris 1). [Downloadable!]
  7. González-Val, Rafael & Lanaspa, Luis & Pueyo, Fernando, 2008. "Trade policies, concentration, growth and welfare," MPRA Paper 9730, University Library of Munich, Germany. [Downloadable!]
  8. Anne Leahy & Alfons Palangkaraya & Jongsay Yong, 2007. "Geographical Agglomeration in Australian Manufacturing," Melbourne Institute Working Paper Series wp2007n11, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
  9. David Sapsford & David Griffiths, 2003. "Foreign direct investment in Mexico," Working Papers 000054, Lancaster University Management School, Economics Department. [Downloadable!]
  10. Don J. Webber & Tony Gore, 2002. "Dematerializing Local Economies: A Case for ad hoc Governance," Local Economy, Taylor and Francis Journals, vol. 17(2), pages 96-110, May. [Downloadable!] (restricted)
  11. Gustavsson, Patrik & Persson, Joakim, 2003. "Geography, Cost-Of-Living, And Determinants To Economic Growth: A Study Of The Swedish Regions, 1911-1993," EIJS Working Paper Series 186, The European Institute of Japanese Studies. [Downloadable!]
  12. Eric Strobl, 2004. "Trends and Determinants of the Geographic Dispersion of Irish Manufacturing Activity, 1926- 1996," Regional Studies, Taylor and Francis Journals, vol. 38(2), pages 191-205, April. [Downloadable!] (restricted)
  13. Henry G. Overman & Stephen Redding & Anthony J. Venables, 2001. "The Economic Geography of Trade, Production, and Income: A Survey of Empirics," CEP Discussion Papers 0508, Centre for Economic Performance, LSE. [Downloadable!]
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