Productivity Growth and Environmental Regulation in Mexican and U.S. Food Manufacturing

Posted: 4 Jan 2003

See all articles by Ebru Alpay

Ebru Alpay

Oregon State University - Department of Economics

Steven Buccola

Oregon State University - Department of Applied Economics

Joe Kerkvliet

Oregon State University - Department of Economics

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Abstract

Many argued during the NAFTA debate that trade liberalization would favor Mexican over U.S. food processors, especially because of lax environmental laws south of the border. We find through an examination of profit functions that productivity growth in Mexico has outstripped that in the United States, suggesting free trade indeed will benefit Mexican suppliers. U.S. pollution regulations have had no impact on the profitability or productivity of U.S. food manufacturing. In contrast, Mexico's swiftly rising environmental standards have enhanced food processors' productivity growth, corroborating the Porter hypothesis. Pollution law, therefore, has favored Mexican over U.S. food processing, but for reasons few had anticipated.

Suggested Citation

Alpay, Ebru and Buccola, Steven and Kerkvliet, Joe R., Productivity Growth and Environmental Regulation in Mexican and U.S. Food Manufacturing. Available at SSRN: https://ssrn.com/abstract=366495

Ebru Alpay

Oregon State University - Department of Economics

Corvallis, OR 97331
United States

Steven Buccola (Contact Author)

Oregon State University - Department of Applied Economics ( email )

213 Ballard Extension Hall
Corvallis, OR 97331-4501
United States

Joe R. Kerkvliet

Oregon State University - Department of Economics ( email )

Corvallis, OR 97331
United States
541-737-1482 (Phone)
541-737-5917 (Fax)

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