The effect of NAFTA on internal migration in Mexico: a regional economic analysis

Trade facilitates growth in some regions of a country while shrinking others, and therefore to benefit from trade, labour may need to be able to migrate. This mobility is particularly crucial in a developing country with high income inequality like Mexico. We seek to answer the following questions: What characteristics facilitate or hinder that internal migration? Has trade liberalization changed the pattern of internal migration in Mexico? We first predict regional economic growth resulting from changes in Mexico-US tariffs by sector. We find that trade liberalization appears to have largely benefited the manufacturing sector. Next, using a spatial gravity model of migration, we find that while economic growth from trade openness drew workers to urban regions in the northern Border States of Mexico, much of the trade-driven migration occurred before NAFTA. Second, contrary to popular belief, migration from largely rural states appears to have decreased since NAFTA. We also find evidence that migration to the United States increased after NAFTA. Last, we find that income disparity in both the destination and origin region deters migration and that this effect increases after NAFTA. Thus, we see evidence that within-region income disparity can hinder migration, potentially exacerbating income disparity among regions.     

NORTH AMERICAN FREE TRADE AGREEMENT BILATERAL TRADE EFFECTS

This study evaluates the effects of the North American Free Trade Agreement (NAFTA) on bilateral trade between the United States and Canada and between the United States and Mexico. Trade flow estimates are from a vector autoregression (VAR) model. The VAR methodology allows modeling bilateral trade in a flexible manner that incorporates both the interaction between different variables and the dynamics of trade, output, prices, and the exchange rate. After testing the outside sample forecasting ability of the models, the study produces dynamic forecasts of bilateral trade. It then compares forecasts incorporating the effects of the NAFTA with baseline forecasts. The results suggest expanded trade for all three countries and an improvement in the U.S. trade position with both Canada and Mexico.     

Spaghetti regionalism or strategic foreign trade: some evidence for Mexico

After signing 10 free trade agreements (FTAs) between 1993 and 2001, Mexico as a world leader in foreign trade policy continues to negotiate with countries such as Japan, Panama, Uruguay or Argentina. Criticism of multiple regional trade agreements (RTAs) arises from a consistency test, but also from the ability of a country to administer them. Mexico's multiple agreements have generally used the principle of NAFTA consistency, after the acceptance that NAFTA became a broader and deeper accord than results of the Uruguay multilateral achievements. An analysis of multiple RTAs is presented, including a game model of equilibrium, along with a political economy approach of why Mexico seeks multiple RTAs as its foreign trade policy.     

Mexico's Business Cycles and Synchronization with the USA in the Post‐NAFTA Years

A number of papers have investigated the increasing macroeconomic ties between Mexico and the USA. These studies have relied on linear models, however, making their results suspect. Other papers have investigated nonlinearity over the Mexican business cycle, but have not studied the links between the Mexican and US economies. In this paper a Markov‐switching model is employed to investigate the changing macroeconomic effect of the USA on Mexico. The findings show that the USA indeed appears to have a much larger impact since the passage of the North Atlantic Free Trade Association (NAFTA) than in previous years. Results also indicate that the level of foreign exchange reserves has much less predictive power for the Mexican economy since NAFTA. This suggests that the greater synchronization with the US business cycle may be more attributable to better macroeconomic management in Mexico than to the closer trade links.     

Trade liberalization,consumption shifting and pollution: Evidence from Mexico's used vehicle imports

This paper develops a model of used vehicle trade between the United States and Mexico, countries with different environmental regulations regarding vehicle emissions. We demonstrate that the United States, with its strict environmental regulations, has a motive to export used vehicles to Mexico, which impacts air pollution emissions from vehicle driving in Mexico. Using unique data on the import and registration of vehicles in Mexico after NAFTA, we find that Mexico's used vehicle imports reduce pollution emissions generated from vehicle driving mainly because of the technique effect, that is, model–age‐comparable vehicles imported from the United States emit less than those originally operated in Mexico.     

North–South Integration and the Location of Foreign Direct Investment

We investigate how North–South integration affects the location of foreign direct investment (FDI) between the two regions. The theoretical analysis suggests that integration affects the incentives of partner and nonpartner Northern countries to locate in the South differently and may lead to investment diversion from the Northern partner. We test our propositions using data from the North American Free Trade Agreement (NAFTA), the first major North–South integration scheme. We find that NAFTA partner FDI in Mexico has increased since the inception of NAFTA above what is implied by other determinants of FDI and the global upward trend during this time. Other countries have not increased their use of Mexico as an export platform. We also find no evidence that inward US FDI has been diverted. The results are robust to a number of different model and econometric specifications as well as the skill data used.     

Causes of Growth and Decline in Mexico’s Maquiladora Apparel Sector

Under the North American Free Trade Agreement (NAFTA) beginning in 1994, the maquiladora sector was the dynamic manufacturing sector in Mexico, and its apparel subsector was especially so, more than quadrupling in employment from December 1993 to July 2000. Yet NAFTA’s influence on apparel employment is hard to find in a careful time series econometric analysis. Instead, much of employment growth is explained for 1980 to the present by changes in US demand as measured by real US gross domestic product or by real US apparel spending, by US/Mexico relative labor cost as proxied by the real peso‐dollar exchange rate, and by the relaxation of quotas on US apparel imports from Mexico in 1988–1990. In equations including these variables, tests for a structural break at the time of NAFTA find an effect which is either insignificant or else quite small and in some models negative. Possible explanations for this surprising result are discussed, along with the implications for cost–benefit analysis of free trade agreements.     

北美自由贸易区经济周期协动性的实证研究

自《北关自由贸易协议》签订并实施以来,美国、加拿大、墨西哥三国间的经贸联系日益密切。三国间经贸投资联系的加强必然会作用于三国宏观经济波动的传导,并改变北美自由贸易区内美、加、墨三国经济周期协同的特点。本文首先探讨了《北美自由贸易协议》对美国、加拿大、墨西哥三国间贸易与投资的积极效应,然后对三国在北美自由贸易区成立前后的经济周期协动性变化的特征事实进行了分析,最后考察并检验了《北美自由贸易协议》对三国间经济周期协动性的影响。     

Socioeconomic Impacts of Public Forest Policies on Heterogeneous Agricultural Households

Nepal has a long history of returning public forests to local people as part of its community forestry programme. In principle the community forestry programme is designed to address both environmental quality and poverty alleviation. However, concern has been expressed that forest policies emphasise environmental conservation, and that this has a detrimental impact on the use of community forests in rural Nepal where households require access to public forest products to sustain livelihoods. To study the effect of government policies on forest use, an economic model of a typical small community of economically heterogeneous households in Nepal was developed. The model incorporates a link between private agriculture and public forest resources, and uses this link to assess the socioeconomic impacts of forest policies on the use of public forests. Socioeconomic impacts were measured in terms of household income, employment and income inequality. The results show that some forest policies have a negative economic impact, and the impacts are more serious than those reported by other studies. This study shows that existing forest policies reduce household income and employment, and widen income inequalities within communities, compared to alternative policies. Certain forest policies even constrain the poorest households?? ability to meet survival needs. The findings indicate that the socioeconomic impacts of public forest policies may be underestimated in developing countries unless household economic heterogeneity and forestry??s contribution to production are accounted for. The study also demonstrates that alternative policies for managing common property resources would reduce income inequalities in rural Nepalese communities and lift incomes and employment to a level where even the poorest households could meet their basic needs.     

Trade agreements and international comovements: The case of NAFTA (North American Free Trade Agreement)

Business cycles correlation between Mexico and the US changed from being on a downward sloping path before 1992 to an upward sloping path after that. This paper suggests that the North American Free Trade Agreement could be the explanation. NAFTA generated not only an increase in the volume of trade but also a change in the elasticity of substitution between imports and exports. The paper tests this hypothesis using the neoclassical business cycles model. Although there are still some discrepancies between the theory and data in the degree of correlation, the direction of change in the model corresponds to the one in the data.     

The Voluntary (Private) Production of Public Goods,the Gains From Trade,and Comparative Advantage*

Any (finite) number of privately produced public goods are incorporated into a general trade-theory model of private goods and factors. Postulating Cournot-Nash behavior, a necessary condition for gainful trade is derived. Potential trade gains are related to the law of comparative advantage in private goods and the change in the underproduction of public goods. A sufficient condition is also proven. Trade gains/losses are compared for more or less populous economies. All the results have analogues in the literature on imperfect competition and/or increasing returns to scale.     

The Scope and Limits of a Public–Private Hybrid: Dispute Settlement under NAFTA Chapter 19

Globalisation is often depicted as having led to an increase in private authority at the expense of that of the state. It is important to correctly specify the scope that private authority has achieved and the capacity of states to push back and limit that authority. This article grounds these theoretical issues in a discussion of the hybrid, public–private dispute settlement mechanism set up in the original Canada–US Free Trade Agreement (CUSTFA), and later extended into Chapter 19 of the North American Free Trade Agreement (NAFTA). It finds that privatising the enforcement process did make a difference. Trade experts on panels saw things differently to judges and in ways that were more sympathetic to exporters. This favoured Canadian and Mexican interests. However, the arrangement lacked deep roots. It was a late-stage compromise in trade negotiations. This rendered it vulnerable to a US counterattack once panels began to rule in favour of Canadian and Mexican challenges to US trade determinations. The transfer of quasi-judicial authority to a public–private hybrid proved contingent, partly on the hegemonic state's ongoing level of comfort with the arrangement, as well as on a lack of business consensus within the United States.     

At a crossroads: consequential trends in recognition of community-based forest tenure from 2002-2017

ABSTRACT

Insecure, contested, and unjust forest tenure arrangements undermine forest investment and protection, fuel conflict, and jeopardize Indigenous Peoples’, local communities’, and indigenous and community women’s rights, livelihoods, and development prospects. While legally recognized community forests tend to have lower rates of deforestation, store more carbon and benefit more people than forests managed by either public or private entities, evidence shows over two-thirds of forests remain controlled by governments – a significant portion of which is contested by indigenous and local communities who traditionally own, manage, and depend on these forests. It is therefore all the more critical that governments support and advance communities’ forest tenure rights. Using longitudinal tenure data and analysis of global forest ownership trends developed by the Rights and Resources Initiative, this article details the distribution of statutory forest rights across 58 countries covering nearly 92% of global forests over the fifteen-year period from 2002–2017.     

The impact of NAFTA on California exports

This study conducts an examination of the North American Free Trade Agreement's (NAFTA) impact on California's export levels to Mexico and Canada while holding constant other variables that explain a state's exports to other nations, such as exchange rates and relative income growth. Transformed weighted least squares equations over a sample period between 1988 and 1997 are used to show that California's exports to Canada were not significantly affected by NAFTA, while exports to Mexico increased, on average, a statistically significant 16.11 percent between 1994 and 1997. The model also suggests that NAFTA's impact on California's exports to Mexico has increased over time from a 10.0 percent increase in 1994 to a 21.8 percent increase by 1997.This is a revised version of the paper presented at the Forty-Eighth International Atlantic Economic Conference, October 7–10, 1999, Montreal, Canada. The authors are grateful to the session participants and an anonymous reviewer for their constructive advice and suggestions in this revision.     

Forest sustainability and trade policies

Many analyses of trade and environment have concluded that trade liberalization is Pareto improvement with Pigovian tax systems even when production and consumption processes bring non-market externalities. But in case of global forest issue there are many accusations that the trade liberalization of forest products has caused the degradation of forest sustainability. In this paper we try to explain the gap between the theory and the real situation from theoretical point of view. We will analyze comprehensively about free trade and forest sustainability by partial and general equilibrium analyses. Pigovian systems work well under the assumption of complete substitutivity of consumption between external effects and marketable commodities. If it were not satisfied, it is inevitable to levy import tariff or to take some domestic price support systems to guide the production point into sustainable forests.     

The role of domestic timber markets in tropical deforestation and forest degradation in Ecuador: Implications for conservation planning and policy

Studies about the impact of the timber trade on tropical forests have often oversimplified process complexity and underestimated regional variability. This study shows that forest degradation and clearing in Northwest Ecuador between 1983 and 1992 was closely linked to commercial logging. A key finding is that domestic demand is critical for shaping timber extraction and, hence, forest degradation and deforestation in this region. Low timber prices for roundwood and sawnwood at the origin, which are bolstering unsustainable forest extraction, have not been affected by market liberalization. This suggests that conservation initiatives that target international trade linkages may only be partially successful, even when they do what they are intended to do. Results suggest that market-based incentives are more likely to produce the desired results if they target and support timber producers directly. These findings are also relevant for other regions where domestic markets are a significant drive for deforestation and where local markets are supplied through the activities of small-scale, labor-intensive primary producers. Also, by emphasizing areas where logging is a dominant force, meso-level studies, like this one, not only help to more accurately estimate the impact on local forests, but also identify major resource flows and the factors promoting or hindering sustainable use, and those affecting the effectiveness of policy options.     

On the Linkages of the Stock Markets of the NAFTA Countries: Fundamentals or Speculative Bubbles?

We analyze whether the linkages between the stock markets of the NAFTA member countries (Canada, Mexico, and the United States) reflect movements in fundamentals or speculative bubbles. To this end, we estimate a state-space model to decompose the stock market indexes of the three NAFTA member countries into fundamentals and speculative bubbles. We analyze the linkages of the three stock markets by means of cointegration techniques. Evidence of cointegration linkages between fundamentals is stronger than evidence of cointegration linkages between speculative bubbles.     

Trade effects of regional integration: A panel cointegration analysis

The paper quantifies the most likely trade effects of the exceptional cases of the GATT/WTO system, namely, Regional Integration Agreements, on the selected member as well as non-member countries of the EU, NAFTA, MERCOSUR and AFTA. To this end, the gravity model was estimated through fixed effects model and panel cointegration analysis. It was found that the explanatory power of the latter has superseded the former one. For the case of EU, it was found that the intra-union trade-creation effect is approximately six times larger than extra-union effects. In NAFTA, exports to outside countries are significantly diverted. For MERCOSUR, on the other hand, results indicate that the integration has not contributed to intra-union trade. The members are still significantly dependent on extra-union imports, just like the members of AFTA.     

Purchasing power parity vs. uncovered interest rate parity for NAFTA countries: The value of incorporating time-varying parameter model

In 1994, the United States, Canada, and Mexico signed the North American Free Trade Agreement (NAFTA) to strengthen economic cooperation. To examine the effects of the NAFTA, this study revisits Purchasing Power Parity (PPP) for NAFTA countries by applying a time-varying cointegration model. Under the time-varying assumption, it improves the explanatory power of reality via the model specification test. Given that, the validity of PPP for NAFTA countries varies over time. Especially, the PPP elasticity based on the consumer price index (CPI) is more volatile than the producer price index (PPI) -based. Thus, the stabilization policy of the consumption sector must be a high priority over the production sector. Moreover, the validity of the Uncovered Interest Rate Parity (UIRP) is examined by the time-varying cointegration model. The aim is to compare the results of the PPP and UIRP. This suggests that the PPP is more useful than the UIRP in evaluating the movement of the exchange rate in the long-run.     

Effects of a Free Trade Agreement on the Exchange Rate Pass‐through to Import Prices

This paper investigates the effect of trade liberalization on the exchange rate passthrough (ERPT) to import prices. To do so, it employs an empirical estimation of the effects of North American Free Trade Agreement (NAFTA) on the Mexican ERPT, and uses a Ricardian general equilibrium model. The model identifies two channels that explain how the trade liberalization alters the ERPT. The first channel is the direct relationship between the tariffs and the pass‐through by good. The second channel is the effect that tariffs have on the composition of imports, altering indirectly the aggregate pass‐through.