NORTH-AMERICAN ECONOMIC-INTEGRATION AND INDUSTRY LOCATION

Does regional economic integration affect the location of economic act ivity inside countries? Discussed in this paper is recent academic lit erature on whether the movement towards free trade in North America ha s influenced the spatial organization of production ill Canada, Mexico , or the United States. In Mexico, closer economic ties with the Unite d 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 premiums p aid to skilled workers. The effects of economic integration on industr y location in Canada and the United States seem to have been much weak er. One exception to this finding is US cities on the Mexican border, whose employment growth is strongly positively correlated with export production in neighbouring Mexican regions. The implication of a possi ble hemispheric free-trade agreement are also discussed.