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

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  • Baylis, Katherine R.
  • Garduno-Rivera, Rafael
  • Piras, Gianfranco

Abstract

This paper studies the regional distribution of the benefits from trade in Mexico after NAFTA. Specifically, we ask whether or not NAFTA has 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. Further, to explicitly identify the effect of the trade agreement, we compare results for growth in traded and non-traded sectors. Given the spatial nature of these data, we make explicit use of spatial econometrics methods. We find that NAFTA caused the wealthy regions nearest to the border to grow faster than others, increasing regional disparity. Second, we find that larger municipalities experienced greater per-capita economic benefits from NAFTA. This effect is particularly noticeable in the north. Somewhat surprisingly, we find that regions with a less literate workforce and worse infrastructure grew faster than other areas after the trade agreement, decreasing regional disparity. We notice these redistributive effects occur primarily in the non-traded sectors.

Suggested Citation

  • Baylis, Katherine R. & Garduno-Rivera, Rafael & Piras, Gianfranco, 2009. "The distributional effects of NAFTA in Mexico: evidence from a panel of municipalities," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49463, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea09:49463
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Álvarez, Antonio & Garduño, Rafael & Núñez, Héctor, 2016. "Modelling the effect of crime on economic activity: The case of Mexican states," Efficiency Series Papers 2016/01, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    2. World Bank, 2013. "Growth without Borders : A Regional Growth Pole Diagnostic for Southern Africa," World Bank Other Operational Studies 16708, The World Bank.
    3. Gregory BROCK & Constantin OGLOBLIN, 2015. "A Stochastic Walk Down Mexico’S Mesoamerican Frontier, 1990-2011," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 15(2), pages 99-114.
    4. repec:bla:presci:v:96:y:2017:i:4:p:843-858 is not listed on IDEAS
    5. Garduno-Rivera, Rafael, 2010. "Effect of NAFTA on Mexico's Income Distribution in the Presence of Migration," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61895, Agricultural and Applied Economics Association.
    6. repec:spr:anresc:v:59:y:2017:i:1:d:10.1007_s00168-017-0823-8 is not listed on IDEAS
    7. Alberto Díaz Dapena & Esteban Fernandez Vazquez & Rafael Garduño & Fernando Rubiera Morollón, 2015. "Does trade imply convergence? Analyzing the effect of NAFTA on the local convergence in Mexico," ERSA conference papers ersa15p282, European Regional Science Association.
    8. Garduno-Rivera, Rafael & Baylis, Katherine R., 2012. "Effect of Tariff Liberalization on Mexico’s Income Distribution in the presence of Migration," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124740, Agricultural and Applied Economics Association.
    9. Hernandez-Trillo, Fausto, 2016. "Poverty Alleviation in Federal Systems: The Case of México," World Development, Elsevier, vol. 87(C), pages 204-214.
    10. Hector M. Nuñez & Dusan Paredes & Rafael Garduño-Rivera, 2017. "Is crime in Mexico a disamenity? Evidence from a hedonic valuation approach," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 59(1), pages 171-187, July.
    11. Farole, Thomas, 2012. "Competitiveness and Connectivity: Integrating Lagging Regions in Global Markets," World Bank - Economic Premise, The World Bank, issue 93, pages 1-5, October.
    12. Henderson, Joanne & Baylis, Katherine R. & Barton, Jason, 2010. "Conversion from Staple to Cash Crop Production in Mexico After NAFTA: Effects of PROCAMPO and Credit Constraints," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61525, Agricultural and Applied Economics Association.

    More about this item

    Keywords

    Regional Disparities; Trade Liberalization; Agglomeration Economies; Economic Growth; Mexico; Transport Cost; Spatial econometrics; Community/Rural/Urban Development; International Development; International Relations/Trade;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • F10 - International Economics - - Trade - - - General

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