Productivity Growth and Environmental Regulation in Mexican and U.S. Food Manufacturing

Ebru Alpay, Joe Kerkvliet and Steven Buccola

American Journal of Agricultural Economics, 2002, vol. 84, issue 4, 887-901

Abstract: Many argued during the NAFTA debate that trade liberalization would favor Mexican over U.S. food processors, especially because of lax environmental laws south of the border. We find through an examination of profit functions that productivity growth in Mexico has outstripped that in the United States, suggesting free trade indeed will benefit Mexican suppliers. U.S. pollution regulations have had no impact on the profitability or productivity of U.S. food manufacturing. In contrast, Mexico's swiftly rising environmental standards have enhanced food processors' productivity growth, corroborating the Porter hypothesis. Pollution law, therefore, has favored Mexican over U.S. food processing, but for reasons few had anticipated. Copyright 2002, Oxford University Press.

Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:84:y:2002:i:4:p:887-901

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