In particular, we are
interested in whether NAFTA afforded poor regions economic opportunities, or whether the benefits
are concentrated in those regions where economic growth was already robust. In the 1990s, a number
of trade economists developed a theory explaining the location of economic activity, called the New
Economic Geography (NEG). We briefly review NEG and its prediction for economic activity, particularly after trade. Next, we present some possible implications of standard trade theory for the location
of benefits from trade. We then use these theories to develop several hypotheses about how NAFTA
may have changed the location of economic activity in Mexico.