IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

The distributional effects of NAFTA in Mexico: Evidence from a panel of municipalities

  • Baylis, Kathy
  • Garduño-Rivera, Rafael
  • Piras, Gianfranco

This paper studies the regional distribution of benefits from trade in Mexico after the North American Free Trade Agreement (NAFTA). Specifically, we ask whether or not NAFTA increased the concentration of economic activity in Mexico. Unlike previous work which uses state-level data, we identify the effect of NAFTA on economic activity at the municipal level allowing us to observe detailed growth patterns across space. To explicitly identify the effect of the trade agreement, we contrast changes in economic activity in regions and sectors more and less likely to be affected by trade. Given the spatial nature of these data, we make use of spatial panel econometric methods. We find that NAFTA caused wealthy regions nearest to the border to grow faster than others, increasing regional disparity. We also find that economic activity in densely populated regions grew less quickly after NAFTA, particularly in the case of traded sectors. Thus, we see evidence that agglomeration lost some of its draw after NAFTA. We also find that regions with a smaller portion of high school graduates and lower levels of infrastructure saw their growth increase after the trade agreement, decreasing regional disparity. We notice these redistributive effects are strongest in the non-traded sectors.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.sciencedirect.com/science/article/pii/S0166046211001141
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 42 (2012)
Issue (Month): 1-2 ()
Pages: 286-302

as
in new window

Handle: RePEc:eee:regeco:v:42:y:2012:i:1:p:286-302
DOI: 10.1016/j.regsciurbeco.2011.09.006
Contact details of provider: Web page: http://www.elsevier.com/locate/regec

References listed on IDEAS
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.:

as in new window
  1. Raymond Robertson, 2000. "Wage Shocks and North American Labor-Market Integration," American Economic Review, American Economic Association, vol. 90(4), pages 742-764, September.
  2. Quah, Danny T, 1997. "Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs," Journal of Economic Growth, Springer, vol. 2(1), pages 27-59, March.
  3. Paul Krugman & Anthony J. Venables, 1995. "Globalization and the Inequality of Nations," The Quarterly Journal of Economics, Oxford University Press, vol. 110(4), pages 857-880.
  4. Aroca, Patricio & Bosch, Mariano & Maloney, William F., 2005. "Spatial dimensions of trade liberalization and economic convergence : Mexico 1985-2002," Policy Research Working Paper Series 3744, The World Bank.
  5. BEHRENS, Kristian & GAIGNE, Carl & OTTAVIANO, Gianmarco I.P. & THISSE, Jacques-François, . "Countries, regions and trade: on the welfare impacts of economic integration," CORE Discussion Papers RP 1936, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Bernard Fingleton & Enrique López-Bazo, 2006. "Empirical growth models with spatial effects," Papers in Regional Science, Wiley Blackwell, vol. 85(2), pages 177-198, 06.
  7. Daniel Chiquiar, 2004. "Globalization, Regional Wage Differentials and the Stolper-Samuelson Theorem: Evidence from México," Working Papers 2004-06, Banco de México.
  8. Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 121-144, May.
  9. Nicita, Alessandro, 2009. "The price effect of tariff liberalization: Measuring the impact on household welfare," Journal of Development Economics, Elsevier, vol. 89(1), pages 19-27, May.
  10. Badi H. Baltagi & Peter Egger & Michael Pfaffermayr, 2005. "Estimating Models of Complex FDI: Are There Third-Country Effects?," Center for Policy Research Working Papers 73, Center for Policy Research, Maxwell School, Syracuse University.
  11. J. Barkley Rosser, 2009. "Introduction," Chapters, in: Handbook of Research on Complexity, chapter 1 Edward Elgar Publishing.
  12. Jan Mutl & Michael Pfaffermayr, 2011. "The Hausman test in a Cliff and Ord panel model," Econometrics Journal, Royal Economic Society, vol. 14(1), pages 48-76, February.
  13. Steven Brakman & Harry Garretsen & Marc Schramm, 2005. "Putting New Economic Geography to the Test: Free-ness of Trade and Agglomeration in the EU Regions," CESifo Working Paper Series 1566, CESifo Group Munich.
  14. Gordon H. Hanson, 1996. "U.S.-Mexico Integration and Regional Economies: Evidence from Border- City Pairs," NBER Working Papers 5425, National Bureau of Economic Research, Inc.
  15. 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.
  16. Paluzie i Hernandez, Elisenda, 1999. "Trade policy and regional inequalities," ERSA conference papers ersa99pa231, European Regional Science Association.
  17. Sala-i-Martin, Xavier X., 1996. "Regional cohesion: Evidence and theories of regional growth and convergence," European Economic Review, Elsevier, vol. 40(6), pages 1325-1352, June.
  18. Fingleton, B & McCombie, J S L, 1998. "Increasing Returns and Economic Growth: Some Evidence for Manufacturing from the European Union Regions," Oxford Economic Papers, Oxford University Press, vol. 50(1), pages 89-105, January.
  19. Hanson, Gordon H, 1998. "North American Economic Integration and Industry Location," Oxford Review of Economic Policy, Oxford University Press, vol. 14(2), pages 30-44, Summer.
  20. Harry H. Kelejian & Ingmar R. Prucha, 1995. "A Generalized Moments Estimator for the Autoregressive Parameter in a Spatial Model," Electronic Working Papers 95-001, University of Maryland, Department of Economics, revised Mar 1997.
  21. Arthur, W Brian, 1989. "Competing Technologies, Increasing Returns, and Lock-In by Historical Events," Economic Journal, Royal Economic Society, vol. 99(394), pages 116-31, March.
  22. Ron Martin, 2001. "EMU versus the regions? Regional convergence and divergence in Euroland," Journal of Economic Geography, Oxford University Press, vol. 1(1), pages 51-80, January.
  23. Rodriguez-Pose, Andres & Gill, Nicholas, 2006. "How does trade affect regional disparities?," World Development, Elsevier, vol. 34(7), pages 1201-1222, July.
  24. Quah, Danny, 1997. "Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs," CEPR Discussion Papers 1586, C.E.P.R. Discussion Papers.
  25. Hanson, Gordon H., 1998. "Regional adjustment to trade liberalization," Regional Science and Urban Economics, Elsevier, vol. 28(4), pages 419-444, July.
  26. Kapoor, Mudit & Kelejian, Harry H. & Prucha, Ingmar R., 2007. "Panel data models with spatially correlated error components," Journal of Econometrics, Elsevier, vol. 140(1), pages 97-130, September.
  27. Monfort, Philippe & Nicolini, Rosella, 2000. "Regional Convergence and International Integration," Journal of Urban Economics, Elsevier, vol. 48(2), pages 286-306, September.
  28. repec:hhs:iuiwop:430 is not listed on IDEAS
  29. Rodriguez-Pose, Andres & Sanchez-Reaza, Javier, 2003. "Economic Polarization Through Trade: Trade Liberalization and Regional Growth in Mexico," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  30. Javier Sánchez-Reaza, 2002. "The Impact of Trade Liberalization on Regional Disparities in Mexico," Growth and Change, Wiley Blackwell, vol. 33(1), pages 72-90.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:eee:regeco:v:42:y:2012:i:1:p:286-302. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.