Migration, Trade, and Foreign Direct Investment in Mexico

Part of the rationale for the North American Free Trade Agreementwas that it would increase trade and foreign direct investment(FDI) flows, creating jobs and reducing migration to the UnitedStates. Since poor data on illegal migration to the United Statesmake direct measurement difficult, data on migration withinMexico, where census data permit careful analysis, are usedinstead to evaluate the mechanism behind predictions on migrationto the United States. Specifications are provided for migrationwithin Mexico, incorporating measures of cost of living, amenities,and networks. Contrary to much of the literature, labor marketvariables enter very significantly and as predicted once possiblecredit constraint effects are controlled for. Greater exposureto FDI and trade deters outmigration, with the effects workingpartly through the labor market. Finally, some tentative inferencesare presented about the impact of increased FDI on Mexico–U.S.migration. On average, a doubling of FDI inflows leads to a1.5–2 percent drop in migration.     

Spatial Dimensions of Trade Liberalization and Economic Convergence: Mexico 1985-2002

This article employs established techniques from the spatialeconomics literature to identify regional patterns of incomeand growth in Mexico and to examine how they have changed overthe period spanned by trade liberalization and how they maybe linked to the income divergence observed following liberalization.The article first shows that divergence has emerged in the formof several income clusters that only partially correspond totraditional geographic regions. Next, when regions are definedby spatial correlation in incomes, a "south" clearly exists,but the "north" seems to be restricted to the states directlyon the U.S. border and there is no "center" region. Overall,the principal dynamic of both the increased spatial dependencyand the increased divergence lies not on the border but in thesustained underperformance of the southern states, startingbefore the North American Free-Trade Agreement, and to a lesserextent in the superior performance of an emerging convergenceclub in the north-center of the country.