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NAFTA and drug-related violence in Mexico

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  • Hidalgo, Eduardo
  • Hornung, Erik
  • Selaya, Pablo

Abstract

We study how NAFTA changed the geography of violence in Mexico. We propose that this open border policy increased trafficking profits of Mexican cartels, resulting in violent competition among them. We test this hypothesis by comparing changes in drug-related homicides after NAFTA’s introduction in 1994 across municipalities with and without drug-trafficking routes. Routes are predicted least cost paths connecting municipalities with a recent history of detected drug trafficking with U.S. land ports of entry. On these routes, homicides increase by 2.1 per 100,000 inhabitants, which is equivalent to 26% of the pre-NAFTA mean. These results cannot be explained by changes in worker’s opportunity costs of using violence resulting from the trade shock.

Suggested Citation

  • Hidalgo, Eduardo & Hornung, Erik & Selaya, Pablo, 2026. "NAFTA and drug-related violence in Mexico," Journal of Development Economics, Elsevier, vol. 181(C).
    • Handle: RePEc:eee:deveco:v:181:y:2026:i:c:s0304387826000027
    DOI: 10.1016/j.jdeveco.2026.103719
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    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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