Trade Liberalization and the Redistribution of Drug-Related Crime: Evidence from Mexico

Author

• Joseph Blayne Brumleve, Southern Illinois University CarbondaleFollow

Date of Award

5-1-2026

Degree Name

Master of Science

Department

Economics

First Advisor

Sylwester, Kevin

Abstract

This paper examines whether the implementation of the North American Free Trade Agreement altered the spatial distribution of drug-related violence in Mexico. Building on the empirical framework of Fernando et al. (2026), I use a difference-in-differences approach exploiting variation in predicted drug-trafficking routes and the timing of trade liberalization to estimate the causal effect of NAFTA exposure on homicide rates. While prior research finds that municipalities along trafficking routes experienced increases in violence following NAFTA, this paper tests whether these effects differ across states with varying levels of pre-existing crime. I construct a state-level measure of baseline homicide intensity and allow treatment effects to vary across low, moderate, and high-crime states. The results show that NAFTA exposure significantly increased drug-related homicide rates, with the largest effects occurring in states with moderate pre-NAFTA crime levels, while the most violence states exhibit no statistically significant change. These findings are consistent with a redistribution of violence rather than an exacerbation of crime in already high-crime regions, suggesting that trade-induced shocks in trafficking incentives shift the geographic concentration of violent activity.