Who Benefited More from the North American Free Trade Agreement: Small or Large Farmers? Evidence from Mexico

15 Pages Posted: 18 Jul 2013

See all articles by Silvia Prina

Silvia Prina

Case Western Reserve University - Weatherhead School of Management - Department of Economics

Date Written: August 2013

Abstract

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.

Suggested Citation

Prina, Silvia, Who Benefited More from the North American Free Trade Agreement: Small or Large Farmers? Evidence from Mexico (August 2013). Review of Development Economics - Special Issue. Guest Editor: Zhihao Yu, Vol. 17, Issue 3, pp. 594-608, 2013, Available at SSRN: https://ssrn.com/abstract=2295286 or http://dx.doi.org/10.1111/rode.12053

Silvia Prina (Contact Author)

Case Western Reserve University - Weatherhead School of Management - Department of Economics ( email )

Cleveland, OH 44106
United States

HOME PAGE: http://faculty.weatherhead.case.edu/prina/

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