Abstract
It is commonly stated that NAFTA has only beneficiated northern states in Mexico, with no absolute gain for the south region of Mexico. In this research, a combination of econometric and multi-sectoral techniques is employed to show this is probably not true. A structural break in manufacturing exports and foreign direct investment is found in the Southeast Gulf of Mexico, which encompass the states of Veracruz, Tabasco, Campeche, Quintana Roo, and Yucatán, most likely caused by those major liberalization reforms. Manufacturing exports might increase by 48.3% of pre-NAFTA levels, whereas FDI rose by 71.6%. The increment in manufacturing exports is linked to a rise of 1.0% in gross value added and 1.7% in employment of the region. Meanwhile, FDI expansion likely contributed with an additional increment of value added and employment of 1%.
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Notes
- 1.
The simple location quotient is defined as the ratio of the share of the activity in the region and the share in the nation, if it is larger than one, then it is evidence that the region is more specialized in that activity.
- 2.
The coefficient of Gini takes the values of 0 to 1, 0 is all activities have the same weight and 1 when one activity produces all the region output. On the other hand, the IHH is an index of concentration, it takes the value of 0 if total region output is produced by a very large amount of activities, and 10,000 when is produced by just one activity.
- 3.
A note of caution is pertinent. Indeed, the econometric approach employed in this exercise allows us to identify a structural change in the variables of interest, the likely period delimiting both regimens and gives us an estimate of the probable impact (i.e., difference between the regimens); however, it does not test formally for a specific cause of the structural change. In this chapter we address the structural change as a consequence of the trade and foreign liberalization measures adopted at the light of NAFTA and other commercial agreements, but also other major reforms were undertaking in those years in agriculture, finance, telecommunications, and competence. Moreover, a major world recession occurred in the second regime years, probably underestimating the difference between regimens.
- 4.
The SAM in its disaggregated format is available upon express request to the authors.
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Ayala Gaytán, E.A., Chapa Cantú, J.C. (2021). Structural Change in the Exports and Foreign Direct Investment of the Southeast Gulf Mexican States. In: de León-Arias, A., Aroca, P. (eds) NAFTA’s Impact on Mexico’s Regional Development. New Frontiers in Regional Science: Asian Perspectives, vol 51. Springer, Singapore. https://doi.org/10.1007/978-981-16-3168-9_7
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