NAFTA and the changing pattern of state exports**We acknowledge the helpful suggestions of three anonymous referees, the participants at the October 2000 meeting of the Federal Reserve System Committee on Regional Analysis, especially Myriam Quispe Agnoli, and the participants at the April 2001 meeting of the Federal Reserve System Committee on International Economic, Analysis, especially James Little. We would also like to thank Ling Wang for research assistance. The views expressed are those of the authors and do not necessarily represent official positions of the Federal Reserve Bank of St. Louis or of the Federal Reserve System

The trade liberalization associated with NAFTA has affected the pattern of state exports by altering the origin as well as the destination of merchandise exports. We find that NAFTA has increased US merchandise exports to Mexico and Canada by just over 15%, and has increased total US merchandise exports by nearly 8%. We also find that although many states have seen large increases in exports to both Mexico and Canada, others have seen large decreases. NAFTA has also affected states' exports to non NAFTA regions of the world, tending to decrease exports to Europe and Latin America and increase exports to Asia. States in the northeast regions of the United States have seen the smallest increases in exports in the wake of NAFTA.