Using NAFTA's effect on Mexico's exports as a natural experiment, this paper conducts an empirical analysis on the explanatory power of the two strands of heterogeneous firms trade models: the heterogeneous firms trade (HFT) model and the quality heterogeneous firms trade (QHFT) model. The paper...

This paper studies whether NAFTA contributed to the productivity convergence between Mexico and the US. Using data from the manufacturing sector for 1986 to 2000 and introducing a number of refinements in the computation of the total factor productivity and estimation methods, it shows that the...