This paper studies the regional distribution of the benefits from trade in Mexico after NAFTA.
Specifically, we ask whether or not NAFTA has 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. Further, to explicitly identify the effect of the trade agreement, we compare results for
growth in traded and non-traded sectors. Given the spatial nature of these data, we make explicit
use of spatial econometrics methods. We find that NAFTA caused the wealthy regions nearest
to the border to grow faster than others, increasing regional disparity. Second, we find that
larger municipalities experienced greater per-capita economic benefits from NAFTA. This effect
is particularly noticeable in the north. Somewhat surprisingly, we find that regions with a less
literate workforce and worse infrastructure grew faster than other areas after the trade agreement,
decreasing regional disparity. We notice these redistributive effects occur primarily in the nontraded
sectors
This paper studies the regional distribution of the benefits from trade in Mexico after NAFTA.Specifically, we ask whether or not NAFTA has increased the concentration of economic activityin Mexico. Unlike previous work which uses state-level data, we identify the effect of NAFTA oneconomic activity at the municipal level allowing us to observe detailed growth patterns acrossspace. Further, to explicitly identify the effect of the trade agreement, we compare results forgrowth in traded and non-traded sectors. Given the spatial nature of these data, we make explicituse of spatial econometrics methods. We find that NAFTA caused the wealthy regions nearestto the border to grow faster than others, increasing regional disparity. Second, we find thatlarger municipalities experienced greater per-capita economic benefits from NAFTA. This effectis particularly noticeable in the north. Somewhat surprisingly, we find that regions with a lessliterate workforce and worse infrastructure grew faster than other areas after the trade agreement,decreasing regional disparity. We notice these redistributive effects occur primarily in the nontradedsectors
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