Schiff, MauriceWang, Yanling2014-04-302014-04-302003-09https://hdl.handle.net/10986/18110The literature on regional integration agreements (RIAs) is vast and deals with political, economic, and political economy issues. The literature on the economics of RIAs deals mostly with static effects, and concludes that these effects are, in general, ambiguous. So far there has been no empirical analysis of the dynamic effects of RIAs based on their impact on technology diffusion from partner and nonpartner countries. Schiff and Wang's paper is a first attempt in this direction. The authors examine the impact of the North America Free Trade Agreement (NAFTA) on total factor productivity in Mexico through its impact on trade-related technology transfers from OECD countries. They estimate trade-related technology diffusion by using a measure of trade-related foreign research and development (R&D). Foreign R&D is constructed based on industry-specific R&D in the OECD, OECD-Mexico trade patterns, and input-output relations in Mexico. The authors find that: Mexico's trade with its NAFTA partners had a large and significant impact on Mexico's total factor productivity, while trade with the rest of the OECD did not. Simulating the impact of NAFTA has led to a permanent increase in total factor productivity in Mexico's manufacturing sector of between 5.5 percent and 7.5 percent and to some convergence with the economies of Canada and the United States.en-USCC BY 3.0 IGOPOLITICAL ISSUESECONOMIC ISSUESTECHNOLOGY DIFFUSIONFREE TRADE AREASDATA SOURCESREGRESSION ANALYSISECONOMIC GROWTHFACTOR PRODUCTIVITY APPARELASSISTANCEBASE YEARBILATERAL INVESTMENTBILATERAL INVESTMENT TREATIESBLOC WELFARECONSTANT RETURNS TO SCALECOST FUNCTIONSCOUNTRY OF ORIGINDEVELOPED COUNTRIESDEVELOPMENTDYNAMIC EFFECTSECONOMETRIC ANALYSISECONOMIC ANALYSISECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIC IMPACTECONOMISTSELASTICITIESELASTICITYEMPIRICAL ANALYSISEMPIRICAL STUDIESENDOGENOUS GROWTHENDOGENOUS GROWTH THEORYEQUILIBRIUMEXPENDITURESFINANCIAL SERVICESFOREIGN DIRECT INVESTMENTFREE TRADEFREE TRADE AGREEMENTGDPGENERAL EQUILIBRIUM ANALYSISGEOGRAPHIC LOCALIZATIONGLOBAL ECONOMYGLOBAL TRADEGLOBAL TRADE ANALYSISGROWTH MODELGROWTH THEORYHUMAN CAPITALIMPACT OF TRADEIMPACT OF TRADE DIVERSIONIMPERFECT COMPETITIONIMPORTED GOODSIMPORTING COUNTRIESIMPORTING COUNTRYIMPORTSINCOMEINCOME CONVERGENCEINCREASING RETURNSINCREASING RETURNS TO SCALEINTERMEDIATE GOODSINTERNATIONAL STANDARDINTERNATIONAL TRADEINVESTMENT TREATIESKNOWLEDGE CAPITALLABOR FORCELOCALIZATIONMEASURE OF TRADEMEMBER COUNTRIESMEMBER COUNTRYMETAL PRODUCTSMETALSMONETARY ECONOMICSMULTILATERALISMNONTARIFF BARRIERSOPEN ECONOMYOPENNESSPARTNER COUNTRIESPER CAPITA INCOMESPOLITICAL ECONOMYPREFERENTIAL TRADEPREFERENTIAL TRADE AGREEMENTSPREFERENTIAL TRADINGPREFERENTIAL TRADING AREASPRODUCTION STRUCTUREPRODUCTIVITYREGIONAL INTEGRATIONREGIONAL INTEGRATION AGREEMENTSREGIONALISMSTATIC EFFECTSSTRUCTURAL REFORMSTECHNICAL CHANGETECHNOLOGICAL KNOW-HOWTECHNOLOGICAL PROGRESSTECHNOLOGY DIFFUSIONTECHNOLOGY TRANSFERSTHEORETICAL MODELSTOTAL FACTOR PRODUCTIVITYTRADETRADETRADE AGREEMENTTRADE BARRIERSTRADE BLOCSTRADE CREATIONTRADE DATATRADE DIVERSIONTRADE LIBERALIZATIONTRADE PARTNERSTRADE PATTERNSTRADE POLICYTRADE UNITTRADING PARTNERSTRANSMISSION OF TECHNOLOGYUNILATERAL LIBERALIZATIONVALUE ADDEDWELFARE LOSSESWORLD ECONOMYAPPARELFACTOR PRODUCTIVITY10.1596/1813-9450-3132