Journal Issue: World Bank Economic Review, Volume 19, Issue 3
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Volume
19
Number
3
Issue Date
Journal Title
Journal ISSN
1564-698X
Journal
World Bank Economic Review
1564-698X
Journal Volume
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Articles
Spatial Dimensions of Trade Liberalization and Economic Convergence : Mexico 1985-2002
(Oxford University Press on behalf of the World Bank, 2005-09-01) Aroca, Patricio; Bosch, Mariano; Maloney, William F.
This article employs established
techniques from the spatial economics literature to identify
regional patterns of income and growth in Mexico and to
examine how they have changed over the period spanned by
trade liberalization and how they may be linked to the
income divergence observed following liberalization. The
article first shows that divergence has emerged in the form
of several income clusters that only partially correspond to
traditional geographic regions. Next, when regions are
defined by spatial correlation in incomes, a south clearly
exists, but the north seems to be restricted to the states
directly on the United States (U.S.) border and there is no
center region. Overall, the principal dynamic of both the
increased spatial dependency and the increased divergence
lies not on the border but in the sustained underperformance
of the southern states, starting before the North American
free-trade agreement, and to a lesser extent in the superior
performance of an emerging convergence club in the
north-center of the country.
Migration, Trade, and Foreign Direct Investment in Mexico
(Oxford University Press on behalf of the World Bank, 2005-09-01) Aroca, Patricio; Maloney, William F.
Part of the rationale for the North
American Free Trade Agreement (NAFTA) was that it will
increase trade and foreign direct investment (FDI) flows,
creating jobs and reducing migration to the United States
(U.S.). Since poor data on illegal migration to the United
States make direct measurement difficult, data on migration
within Mexico, where census data permit careful analysis,
are used instead to evaluate the mechanism behind
predictions on migration to the United States.
Specifications are provided for migration within Mexico,
incorporating measures of cost of living, amenities, and
networks. Contrary to much of the literature, labor market
variables enter very significantly and as predicted once
possible credit constraint effects are controlled for.
Greater exposure to FDI and trade deters outmigration, with
the effects working partly through the labor market.
Finally, some tentative inferences are presented about the
impact of increased FDI on Mexico- U.S. migration. On
average, a doubling of FDI inflows leads to a 1.5 to 2
percent drop in migration.
Tracking NAFTA's Shadow 10 Years On : Introduction to the Symposium
(Published by Oxford University Press on behalf of the World Bank, 2005-12-27) Lederman, Daniel; Serven, Luis
The North American Free Trade Agreement
(NAFTA) is arguably the first case study of what may be
expected from the increasing number of preferential trade
agreements involving both developed and developing
economies. Ten years after the treaty's inception, it
is time to assess how its outcomes compare with initial
expectations. The articles in this symposium issue provide
insights into the effects of NAFTA on economic geography,
trade, wages and migration, and foreign investment from
Mexico's perspective. The contributions paint a complex
post-NAFTA reality characterized by persistent intra-bloc
trade barriers, interregional inequality within Mexico,
labor market outcomes that seem closely tied to migration
patterns and international trade and investment, and foreign
investment flows that appear weakly related to trade agreements.
Has NAFTA Increased Labor Market Integration between the United States and Mexico?
(Published by Oxford University Press on behalf of the World Bank, 2005-09) Robertson, Raymond
This article analyzes three criteria for
labor market integration between Mexico and the United
States (U.S.) before and since the North American Free Trade
Agreement (NAFTA): the responsiveness of Mexican wages to US
wage shocks, the speed at which relative wages return to a
long-run differential, and changes in the rate of
convergence of absolute wages. Tests for increased
integration using these three criteria generate mixed
results, which are then explored by directly incorporating
trade, foreign direct investment (FDI), and migration. The
results suggest that trade and FDI did in fact positively
contribute to integration but that the increase in border
enforcement depressed Mexican wages, masking the positive benefits.
Market Access and Welfare under Free Trade Agreements : Textiles under NAFTA
(Published by Oxford University Press on behalf of the World Bank, 2005-12-29) Cadot, Olivier; Carrere, Celine; de Melo, Jaime; Portugal-Perez, Alberto
The effective market access granted to
textiles and apparel under the North American Free Trade
Agreement (NAFTA) is estimated, taking into account the
presence of rules of origin. First, estimates are provided
of the effect of tariff preferences combined with rules of
origin on the border prices of Mexican final goods exported
to the United States (U.S.) and of U.S. intermediate goods
exported to Mexico, based on eight-digit harmonized system
tariff-line data. A third of the estimated rise in the
border price of Mexican apparel products is found to
compensate for the cost of complying with NAFTA's rules
of origin, and NAFTA is found to have raised the price of
U.S. intermediate goods exported to Mexico by around 12
percent, with downstream rules of origin accounting for a
third of that increase. Second, simulations are used to
estimate welfare gains for Mexican exporters from
preferential market access under NAFTA. The presence of
rules of origin is found to approximately halve these gains.
The Effects of NAFTA on Antidumping and Countervailing Duty Activity
(Published by Oxford University Press on behalf of the World Bank, 2005-09) Blonigen, Bruce A.
Treatment of unfair trade laws has
become an important topic in negotiations on preferential
trading areas. Recent preferential trading areas involving
the United States (U.S.), one of the most significant users
of these laws, have established special bi-national dispute
settlement panels to arbitrate disagreements. Using a panel
database of U.S. antidumping and countervailing duty
activity from 1980 through 2000, the article examines
whether the use of dispute settlement panels has reduced
such activity between the United States and its North
American Free Trade Agreement (NAFTA) partners.
The analysis finds little evidence for any effect, calling
into question the effectiveness of dispute settlement panels
in reducing unfair trade law activity.
Foreign Direct Investment in Mexico since the Approval of NAFTA
(Published by Oxford University Press on behalf of the World Bank, 2005-12-06) Cuevas, Alfredo; Messmacher, Miguel; Werner, Alejandro
Cross-country panel data are used to
assess the effect of free-trade agreements on flows of
Foreign Direct Investment (FDI). Free-trade agreements are
found to have a significant positive effect on FDI flows,
and free-trade agreements are found to matter more for the
smaller members of the agreement. For example, the North
American Free-Trade Agreement's (NAFTA) effect on FDI
flows into Mexico is much larger than its effect on flows
into the United States. These cross country results are used
to assess NAFTA's effect on FDI flows into Mexico.
After controlling for a set of other factors such as an
increase in worldwide FDI flows the trade agreement is found
to generate FDI flows nearly 60 percent higher than they
would have been without the agreement.