This article provides an analysis of the famous NAFTA trade deal by detailing its successes and failures within both an historical and geographical context. As intended and, perhaps, as one would expect, NAFTA has been very successful in helping integrate the economies of the U.S. and Mexico as evident in the fact that "trade between the US and Mexico has risen from 1.3% of combined GDP in 1994 to 2.5% in 2015". Furthermore, the article notes how "Mexico’s real income per person, on a purchasing-power-parity basis, has risen from about $10,000 in 1994 to $19,000." Despite this, however, critics of the deal rightly point out that individual economic gains have been very unevenly distributed and, relatively speaking, could be much greater.
When evaluating the merits of a trade deal like NAFTA, it's necessary to do so within a larger historical and economic framework. Specifically, this article discuses how the "full potential" of NAFTA was never reached due to events like the Mexican peso crises from 1994-95, American border controls enacted in the wake of 9/11, and even the growth of China's economy. Importantly, while it's certainly true that NAFTA has led to some job loss, economic historian Brad DeLong points to an estimate that this may only account for around .1% of net job losses in the U.S. economy, "fewer jobs than the American economy adds in a typical month." Beyond this, a more complete assessment shows that manufacturing jobs have been on the decline for several decades, an outcome that has only been accelerated with the rise of automation technologies not to mention a strong dollar and higher quality transportation/communication capacities that have made relocating abroad increasingly attractive.
Although NAFTA could very well have never been signed, America's incredibly close physical proximity to Mexico along with the respective size of each countries' economies makes it essentially inevitable they'd be trading partners. Additionally, while concerns about the changing nature of jobs in an increasingly globalized world are legitimate, it's important to remember that, as this article points out, globalization is not a zero-sum game since a greater exchange of goods and services ultimately stands to benefit everyone. Moreover, because of NAFTA Mexico has become more prosperous overall thereby better enabling it to deal with migration (net migration to the U.S. has, in fact, been negative for several years now), an issue which, ironically, some who oppose NAFTA are fervently worried about. What do you think of NAFTA's impact over the last 23 years?
http://www.economist.com/news/finance-and-economics/21716033-nafta-has-been-disappointment-its-benefits-are-underappreciated-defence
3 comments:
I think this article laid out an objective perspective on the positive and negative results from the NAFTA agreement. It's interesting to see how much the relationship between Mexico and US has benefited the US and the idea that we ought to restrict that relationship in anyway seems to be flawed. It's also interesting to see that net migration in the US has been negative over the last few years. This is contrary to much of the narrative created by the media and political figures regarding the influx of mexican immigrants.
NAFTA has decreased trade restrictions which has made it easier for Americans to purchase Canadian and Mexican goods. As of 2010, the most recent year for which these data were available, the United States received about a quarter of its imports from these two countries, which are its second and third largest suppliers of imported goods. In particular, the U.S. gets much of its crude oil, vehicles, machinery and gold from these two countries, as well as fresh produce, snack foods, live animals, red meat and chilled and frozen foods. On the other hand the Mexican middle class has benefited less than expected from NAFTA especially since Trump has stopped American companies from building factors in Mexico leading to less jobs for the Mexican middle class. It'll be interesting to see what happens to the future of NAFTA under the current administration.
i thought that this article was interesting. trump was just talking about the NAFTA agreement a couple days ago and was talking about what we are going to do with it. i just read an article saying that the leader of Mexico called trump out and said the things he said were lies. it will be interesting to see how trumps responds to this.
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