Great Expectations: Mexico's Short-Lived Convergence under NAFTA (original) (raw)

NAFTA's Developmental Impact on Mexico: Assessment and prospects

This article assesses the developmental record of the North American Free Trade Agreement (NAFTA) in Mexico fifteen years after its implementation. After analyzing the evolution of trade and investment flows and their impact on employment and wage levels in the manufacturing and agricultural sectors, the author highlights the success and limits of the NAFTA integration model. He concludes that while NAFTA should not be seen as a solution to all of Mexico’s socio-economic problems, NAFTA nonetheless suffers from a "deficient [social] institutionality" that can be addressed through both domestic and supranational reforms. At the domestic level, the Mexican government should rethink its export-led growth strategy and prioritize tax reforms and domestic investments in education and infrastructure. At the supranational level, the NAFTA model should be upgraded to address its social lacunae, especially in the policy spheres of investment, immigration, agriculture, and resource transfers.

Mexico under NAFTA: a critical assessment

The Quarterly Review of Economics and Finance, 2003

This paper assesses the evolution and performance of several key economic and social variables in Mexico following the passage of NAFTA. The evidence shows that under NAFTA Mexican trade and foreign direct investment inflows have risen at rapid rates, particularly in the export-oriented assembly-line sector. However, the evidence also suggests that it is hard to disentangle the effects of NAFTA from the other non-NAFTA factors such as demand in the U.S. in explaining the dynamism of the Mexican export sector (and economy). This has been attested by how the Mexican economy has been dragged into a severe recession over the past two years as a result of the relatively mild downturn in the U.S. business cycle. Insofar as employment growth, real wages in manufacturing, and productivity performance is concerned, the evidence presented indicates that the record has been lackluster at best and disastrous at worst. Manufacturing employment fell dramatically after the peso crisis, and remains stagnant. Real wages have plunged since the peso crisis and have yet to recover levels attained in the mid-1980s. In terms of productivity performance, no strong conclusions can be reached given the conflicting estimates in the extant literature. At best, the data show that productivity rose at healthy rates in the tradeable sector, but stagnated in the non-tradeable sector. Finally, the paper presents evidence which shows that both the functional and size distribution of income have become more skewed during the period of trade and investment liberalization (JEL 040,054).

Rethinking trade policy for development: Lessons from Mexico under NAFTA

Policy Outlook, 2009

• The North American Free Trade Agreement (NAFTA) is a good place to begin a comprehensive review of U.S. trade agreements, as called for by President Obama. Any U.S. review of NAFTA should, however, go beyond its impact on the United States to assess its effects on Mexico. • The evidence points overwhelmingly to the conclusion that Mexico's reforms, backed by NAFTA, have largely been a disappointment for the country. Despite dramatic increases in trade and foreign investment, economic growth has been slow and job creation has been weak. Now, with its economy so closely tied to that of its northern neighbor, Mexico is suffering the most severe economic crisis in the region. • Reforms to the template for U.S. trade agreements must go deeper than the incorporation of improved labor, environmental, and intellectual property provisions, as seen in more recent U.S. trade agreements. Such measures are laudable, but they would have had little impact on the negative trends we have seen in Mexico under NAFTA.

THE MEXICAN ECONOMY AFTER NAFTA

The paper examines to what extent the key goals that Mexico aimed to reach with the implementation of the North America Free Trade Agreement (NAFTA) have been achieved by 2005, more than ten years after it was put in place. The analysis of the statistical information show that NAFTA's capacity to impact Mexico's overall path of economic development -as well as that of the whole package of macroeconomic reforms implemented- was overestimated. Cer- tainly, NAFTA helped to produce an export boom and an inflow of much needed foreign invest- ment to Mexico. But, it failed to alleviate the fundamental constraints on Mexico's long-term eco- nomic growth and job generation. Neither did it ensure that the macroeconomic reform process will be deepened. It concludes by stating that NAFTA's positive impact has likely reached a point of exhaustion, and it is due time for Mexico to rethink key elements of its overall development strategy.

Industrialization and Economic Growth in Mexico after NAFTA: The Road Travelled

Development and Change, 2005

This article examines Mexico's industrial policy and economic performance, focusing on an analysis of the structural changes in its manufacturing sector associated with NAFTA. The aim of the article is to improve our understanding of why the post-NAFTA evolution of the Mexican economy has been characterized by lights and shadows, with low inflation, low budget deficits and a surge in non-oil exports on the one hand, and on the other hand a slower than expected expansion of economic activity and employment. The article also presents some policy implications on the need for a new development agenda if Mexico is to finally succeed in its quest for high and sustained economic growth.

An overview of NAFTA since its implementation: Mexico´s perspective

Mexico shifted its development paradigm from strong intervention in agricultural and rural development to a neoliberal state with the General Agreement on Tariffs and Trade in 1986, and later implementation in North American Free Trade Agreement in 1994. Although there has been economic growth in absolute terms, the agriculture and rural sectors have deteriorated under the Agreement with increases in income inequality, local and international migration, and the drug economy driven by U.S. demand. Land stewardship has deteriorated and food security and labor sovereignty have been compromised. Some options are offered to enrich the debate for Agreement renegotiation.

NAFTA's Promise and Reality: Lessons from Mexico for the Hemishphere

2003

El Colegio de México (COLMEX) has been our research partner from the beginning, and we wish to thank General Academic Coordinator Jean Francois Prud'Homme for the exceptional research conducted by his colleagues. In particular, the work done by Antonio Yúnez-Naude and his colleagues at the Programa de Estudios del Cambio Económico y la Sustentabilidad del Agro Mexicano (PRECESAM) was essential to our understanding of the relationship between trade liberalization and agriculture. We have been privileged to work with an excellent team of assistants, including Carnegie Junior Fellows Vanessa Ulmer and Jacob Steinfeld, and Kristen Dubay, from Duke University. Maria Carlo helped keep us on schedule by mastering travel schedules, contracts, and deadlines. Demetrios Papademetriou at the Migration Policy Institute (MPI) was assisted by Maia Jachimowicz and Kevin O'Neil. MPI senior fellow and former head of the United States Immigration and Naturalization Service Doris Meissner provided guidance throughout the project. In addition to our research team, the following people reviewed chapters and gave us their time and suggestions: Chantal Line

NAFTA's promise and reality: lessons from Mexico for the Hemisphere

2003

Tracking NAFTA's Shadow 10 Years on: Introduction to the Symposium

The World Bank Economic Review, 2005

The North American Free Trade Agreement (NAFTA) is arguably the first ''case study'' of what might be expected from the increasing number of preferential trade agreements involving both developed and developing economies. Ten years after the treaty's inception, it is time to assess how its outcomes compare with initial expectations. The articles in this symposium issue provide insights into the effects of NAFTA on economic geography, trade, wages and migration, and foreign investment from Mexico's perspective. The contributions paint a complex post-NAFTA reality characterized by persistent intrabloc trade barriers, interregional inequality within Mexico, labor market outcomes that seem closely tied to migration patterns and international trade and investment, and foreign investment flows that appear weakly related to trade agreements. NAFTA seems to be the first trade agreement in history for which the traditional static trade creation or diversion effects are likely negligible-and hard to identify in any case.

Great Expectations: Mexico's Short-Lived Convergence under NAFTA (original) (raw)

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