Spatial Integration Of Mexico And United States In Grain Market: The Case Of Maize, Wheat And Sorghum
Based on agricultural trade liberalization that the Mexican governments began to implement in early 1990s and increasing agricultural trade flows in North America, in this paper we show empirically that trade liberalization between Mexico and United States (U.S.) under the North American Free Trade Agreement (NAFTA) has implied structural change in prices received by Mexican producers of maize, sorghum and wheat, and that this has been accompanied by price convergence with U.S. prices of these crops. Using data on Mexico and U.S. prices from 1981 to 2010, the study provides evidence that trade liberalization has led to greater integration of Mexico-U.S. agricultural markets, specifically of the three major food-crops produced in Mexico, evidenced by the existence of a long-term relationship between the price series analyzed, greater flows of trade, and an increase in the speed of adjustment of domestic prices in response to changes in international prices.
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