THREE ESSAYS ANALYZING THE IMPACT OF GLOBALIZATION ON MEXICO'S DEVELOPMENT

Abstract

The first chapter studies the impact of the U.S-Mexico avocado trade on Mexico's crime. The grip of drug cartels in Mexico casts a dark shadow over the nation, fueling rampant violence, fierce territorial disputes, and widespread regional instability. Mexican politicians and international spectators alike are becoming increasingly aware of a troubling trend: cartels are diversifying their operations into the avocado industry, a lucrative market they exploit to finance their violent agendas. Using data from 460 Mexican municipalities over the period 1997 to 2019, this study exploits exogenous weather changes in U.S. avocado-producing regions to show that increased Mexican avocado producer prices decreased homicide in Mexican municipalities more climatically suited to grow avocados, likely due to increased agricultural employment there. However, after the War on Drugs began in 2006, higher avocado prices \emph{increased} homicide, property crime, and cattle theft in those same municipalities. This time heterogeneity likely stems from drug cartels more aggressively diversifying their portfolios to the avocado industry to fund violence against Mexico's government and competing cartels. The second chapter investigates how U.S.-Mexico avocado trade has affected Mexico's surface water quality. This chapter provides empirical evidence that the 2016 Mexican Hass Avocado Import Program amendment led to improved water quality likely due to Mexican avocado farmers incorporating cleaner production methods and applying less harmful pesticides to their avocados. Two-way fixed effects difference-in-differences analysis shows that the policy improved surface water quality, reducing biochemical oxygen demand (BOD) by approximately 12 percent and chemical oxygen demand (COD) by 11 percent. The third chapter examines the impact of foreign direct investment inflow on Mexico's gender wage gap. There is an ongoing discussion of the numerous effects of trade openness on Latin America’s economy. In this study, I evaluate the impact of the Mexico-EU Free Trade Agreement (FTA) of 2000 on Mexico’s gender wage gap. For Mexico, the policy encouraged FDI inflow from Europe; however, 91.5 percent of this FDI went to the Mexico City Federal District or the states of Mexico, Nuevo Leon, Jalisco, and Puebla. FDI inflow tends to benefit foreign manufacturing companies' wages in the host country. I use survey data from 1995 to 2004 and apply a difference-in-differences model to assess the policy's effect on gender wage inequality. The empirical findings indicate an increased disparity in men’s average monthly earnings and hourly wages compared to women after the enactment of the trade policy in these 5 states. The empirical evidence also indicates no change in the average hours worked by both genders after the policy. The findings suggest that one contributing factor to the increase in the gender wage gap in this region may be the highly concentrated inflow of foreign direct investment from the European Union.