NAFTA and drug-related violence in Mexico

Our empirical strategy exploits the fact that the introduction of NAFTA in 1994 increased the value of controlling the corridors for transporting illegal drugs into the U. [...] There are few studies that explore the early development of the drug industry in Mexico during the 1990s, the golden years of Mexican cartels that may have paved the path for current conflicts.3 Dube, Garćıa-Ponce and Thom (2016) analyze how international commodity-price fluctuations, driven by the introduction of NAFTA in 1994, affect the illegal drug market in Mexico. [...] 8 The map in Figure A.1 in the Appendix shows the change in drug-related homicides comparing the periods 1990–93 and 1994–99, before and after the introduction of NAFTA. [...] In our setting, the (time-invariant) share reflects the fraction of the respective population in municipality i that is employed in the primary or secondary sector in 1990 using data from the Instiuto Nacional para el Federalismo y Desarrollo Municipal (INAFED).15 The (time-varying) aggregate shift is calculated as the sector- specific (agricultural or industrial) value of imports of goods and ser. [...] To rule out that the increase in drug-related violence on trafficking routes is driven by an increase in the cultivation of illegal crops rather than drug-trafficking, we add an interaction term between the municipal-level attainable yields for maize from the FAO-GAEZ database and the annual fluctuation in the national price of maize in the 1990s as a control variable.