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Abstract

This paper studies whether NAFTA contributed to the productivity convergence between Mexico and the US. Using data from the manufacturing sector and introducing a number of refinements in the computation of the total factor productivity and estimation methods, it shows that NAFTA is associated with a higher speed of convergence of productivity levels than the previous literature found. The paper also finds that under NAFTA the industries which have smaller productivity gap experienced higher speed of convergence (catch-up) than the industries which have larger productivity gap.

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