NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

North American Economic Integration and Industry Location

Gordon H. Hanson

NBER Working Paper No. 6587
Issued in June 1998
NBER Program(s):   ITI

Does regional economic integration affect the location of economic activity inside countries? In this paper, I discuss recent academic literature on whether the movement towards free trade in North America has influenced the spatial organization of production in Canada, Mexico, or the United States. In Mexico, closer economic ties with the United States appear to have contributed to a contraction of employment in the Mexico City manufacturing belt, a rapid expansion of manufacturing employment in northern Mexico, and an increase in the wage premia paid to skilled workers. The effects of economic integration on industry location in Canada and the United States seem to have been much weaker. On exception to this finding is U.S. cities on the Mexican border, whose employment growth is strongly positively correlated with export production in neighboring Mexican regions. I also discuss implications of a possible hemispheric free trade agreement.

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Document Object Identifier (DOI): 10.3386/w6587

Published: Oxford Review of Economic Policy, Vol. 14 (1998): 30-44.

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