ABSTRACT
For Mexico, the main expected gains from North American Free Trade Agreement (NAFTA) concentrated on the attraction of foreign direct investment (FDI) mainly from United States, but also from third-country transnational corporations. In order to analyze the changes in Mexico's regional pattern of growth during the NAFTA era, the regional division presented in is adopted. The recently developed New Economic Geography (NEG) models are very helpful in establishing how the regional pattern of growth and competitive advantage can change over time as transport costs fall. During the NAFTA era, economic growth in most Mexican regions, as measured by employment, has become more sensitive to growth in the United States and particularly in the US Pacific region. Traditionally, export growth in Mexico has been closely tied to the maquiladora sector, which accounts for approximately one-half of total exports and for 55-60 percent of manufacturing exports.
