Increasing Agglomeration or Dispersion? Industrial Specialization and Geographic Concentration in NAFTA

We analyze industrial specialization and geographic concentration patterns within the NAFTA area during 1988-2000 and examine the determinant of spatial concentration. NAFTA countries have become increasingly dissimilar over time. A changing spatial structure of total NAFTA manufacturing is also evident. Manufaturing is increasingly relocating to Mexico, wich comes at the expense of the US. In addition , tere is evidence of a general upward trend in the degree of relative geographic concentration of North-American industries. Labor-intensive and low-technology activities appear to be the most spatially concentrated industries, exhibiting a strong increasing trend. Comparative advantage factors largely explain geographic concentration of industries across NAFTA countries, indicating the empirical relevance of traditional trade theory in the NAFTA case.