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

Kathy Baylis, Rafael Garduño-Rivera and Gianfranco Piras
Authors registered in the RePEc Author Service: Rafael Garduño Rivera

Regional Science and Urban Economics, 2012, vol. 42, issue 1-2, 286-302

Abstract: 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.

Keywords: Regional disparities; Trade liberalization; Economic geography; Economic growth; Mexico; Transport cost; Spatial panel data models; NAFTA (search for similar items in EconPapers)
JEL-codes: C21 C23 F10 R11 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0166046211001141
Full text for ScienceDirect subscribers only

Related works:
Working Paper: The distributional effects of NAFTA in Mexico: evidence from a panel of municipalities (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:42:y:2012:i:1:p:286-302

DOI: 10.1016/j.regsciurbeco.2011.09.006

Access Statistics for this article

Regional Science and Urban Economics is currently edited by D.P McMillen and Y. Zenou

More articles in Regional Science and Urban Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().