The author would like to thank Dilip Mookherjee for his continuous guidance and support. Special thanks to Nava Ashraf and Margaret McMillan for sharing their data, and to Juan Carlos Torres of the Instituto Nacional de Estadística y Geografía for tireless data assistance.
Who Benefited More from the North American Free Trade Agreement: Small or Large Farmers? Evidence from Mexico
Article first published online: 17 JUL 2013
© 2013 John Wiley & Sons Ltd
Review of Development Economics
Special Issue. Guest Editor: Zhihao Yu
Volume 17, Issue 3, pages 594–608, August 2013
How to Cite
Prina, S. (2013), Who Benefited More from the North American Free Trade Agreement: Small or Large Farmers? Evidence from Mexico. Review of Development Economics, 17: 594–608. doi: 10.1111/rode.12053
- Issue published online: 17 JUL 2013
- Article first published online: 17 JUL 2013
This paper measures the impact of increasing trade openness between Mexico and the USA resulting from the North American Free Trade Agreement (NAFTA) on the income of small versus large farmers in Mexico. Benefits resulting from higher prices of export goods as well as losses incurred from greater import competition are considered. First, relating NAFTA cuts in trade restrictions to border prices of Mexican exports and imports, it is found that NAFTA-induced tariff reductions decreased the border price of corn, Mexico's main agricultural import, and increased the border prices of tomatoes and melons, Mexico's main agricultural exports. Then, it is shown that the rise in fruit and vegetable prices benefited small farmers more than large farmers; while the drop in corn prices hurt large farmers more. Finally, the results from the regional-level analysis suggests that the effects are stronger in the central states than in the northern and southern states.