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