• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Is Mexico better off with NAFTA

Extracts from this document...


QUESTION 5 This essay aims to critically evaluate if Mexico is better off as a result of the North American Free Trade Agreement (NAFTA). In reality, NAFTA is an extension of the Free Trade Agreement (FTA) between the United States and Canada which entered force in 1989. FTA expanded to include Mexico and January 1 1994 NAFTA came into effect and was the largest free trade area in the world, comprised of Canada, the United States and Mexico. This made North America the one of the most economically integrated regions of the world. Worth noting in relation to NAFTA; this was the first time industrialised economies, such as the United States and Canada, integrated a non industrialised economy, Mexico, to such extent. According to the governments of the NAFTA signatories; "NAFTA fuels economic growth and dynamic trade, stimulates investment whiles creating productive partnerships, works for small and medium-sized businesses and provides fairness and certainty. NAFTA partners promote environmental protection, and provide greater job opportunities in North America"1. With an outset in the latter statement, this essay will first give a short introduction to NAFTA; why would Mexico join in? Its structure and elaborate on its specific main goals. Then, on the basis of statistical analysis of Mexico before and after NAFTA, it will critically compare the main objectives of NAFTA in relation to the actual development in Mexico. This will in turn enable this essay to reach a clear and objective conclusion on whether Mexico is better off as a NAFTA member and also investigate some future potential Mexican trade issues in relation to NAFTA. ...read more.


The fact of the matter is that NAFTA has not been able to create a sufficient level of job opportunities in Mexico. In the post NAFTA era Mexico has experienced a shift in export. Traditionally Mexico exported mostly agricultural products to its NAFTA members, but after the cut in tariffs on imports, a growing trade deficit in agricultural trade with the United States is evident. This in turn is offset by a surplus in manufactured goods exported from Mexico. The result of this diversification in Mexican trade; a loss of over one million jobs in the agricultural sector since 1994, while the manufacturing sector has only produced 500,000 new work places. 8 "The US government reports that even in nominal dollar value terms, Mexican manufacturing wages were no higher in 2000 than in NAFTA's first year and considerably lower than in 1981, prior to Mexico's sweeping market reform. Making ends meet in Mexico's rural areas is even tougher. NAFTA opened floodgates to cheap US corn imports, leading to an 18-fold increase between 1993 and 2000. The devastating impact on Mexican farmers is reflected in the rising rural poverty rate, which climbed from 79 per cent in 1994 to 82 per cent in 1998, according to the World Bank"9. The "Tequila Crisis" is obviously one factor to the slow growth in wages, but still increased productivity fails in converging Mexican wages to American wages, which most theory suggests it should do. Why has increased trade and FDI resulted in lower wages and less jobs for the Mexican people? ...read more.


Then at the same time it is hard to believe that trade, FDI or productivity would be at the same level as it has been in the post NAFTA period. The failure of NAFTA has not been in fuelling the economy, but rather to transfer the growth in this area to Mexican society. So in many ways NAFTA has actually come true on their promises. In reality even though NAFTA is a fairly negotiated deal, trade agreements has a tendency to create winners and losers, especially when one part of the deal is obviously so much weaker than the other. Mexico is not a loser in this agreement, but the developments of NAFTA has not come around as quickly as one might had hoped for. WORD COUNT: 2497 1 Audly, J. J., Papademetriou, G., D., Polaski, S., Vaughan, S. (2004) p. 5 2 Ravenhill, J. (2005) p. 126 3 Kose, A., M., Meredith, M., G., Towe, M., C. (2004) p. 9 4 Kose, A., M., Meredith, M., G., Towe, M., C. (2004) p. 9 5 Kose, A., M., Meredith, M., G., Towe, M., C. (2004) p. 35/36 6 Weisbrot, M., Rosnick, D., Baker, D. (2004) 7 Audly, J. J., Papademetriou, G., D., Polaski, S., Vaughan, S. (2004) p. 14 8 Audly, J. J., Papademetriou, G., D., Polaski, S., Vaughan, S. (2004) p. 20 9 Cavanagh, J., Anderson, A., Serra, J., Espinosa, E., J. (2002) 10 Gruben, C., W. (2006) 11 Audly, J. J., Papademetriou, G., D., Polaski, S., Vaughan, S. (2004) p. 40 12 Kose, A., M., Meredith, M., G., Towe, M., C. (2004) p. 28 13 Emmond, K. (2006) Imagining Mexico Without NAFTA ?? ?? ?? ?? 1 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level UK, European & Global Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level UK, European & Global Economics essays

  1. Comprehensive Anatomy of China

    The pinyin method is also frequently employed to transliterate Chinese words for diplomatic, official and media purposes. The differentiation between the regional dialects lies within the pronunciation of the characters. Consequently, each dialect assigns a unique tone for a given word, making their spoken forms unintelligible.

  2. Where does the World Trade Organisation fit in the overall scheme of international public ...

    The proliferation of RTAs is a fact of life. However, it is vital to accelerate non-discriminatory liberalisation on the multilateral track, as well as strengthen WTO rules and procedures to monitor and discipline RTAs. If that does not occur, RTAs will have increasingly harmful effects, particularly for developing countries. d)

  1. North American Free Trade Agreement (NAFTA)

    Essentially, what this boils down to is the fact that the only interest that potential investors have to consider is that of their own. Foreign investors in all actuality have nothing to really loose as they lack any sort of consequences with regards to their code of conduct as states are prohibited from taking foreign investors to the tribunal.

  2. In this report, we shall explore the reasons for the shift from multilateralism to ...

    For instance, Japan supplies the essential capital goods, while Hong Kong, Taiwan and Singapore provide finance, design and marketing expertise. Thailand, China and Indonesia on the other hand focus on labour-intensive operations. This arrangement in turn allows APEC member economies on average to enjoy lower cost of living because of the reduced trade barriers and a more economically competitive region.

  1. Globalisation of GAP

    Obviously Gap would have taken into consideration the positives and the negatives about joint ventures but found that the disadvantages were outweighing the advantages. The second idea the business could use would be franchising. For many businesses this is the best way into international markets.

  2. Islamic terrorism is a serious problem for the United States because of the threat ...

    The dawn of the modern age of terrorism dates back to September 5, 1972, when the Palestinian terrorists attacked the Israeli Olympic team in Munich. Following this, there has been a period of hijacking of commercial airlines, which culminated in the destruction of Pan Am 103 over Lockerbie.

  1. Can there be certainty?

    This shows that The Body Shop is willing to increase custom by showing what they offer for free, as they are attracting customers to buy goods by showing that they have free services. Franchises are legal agreements by which local businesses are allowed to setup using the name, logo, and trading methods of a well-known company.

  2. In what ways is the government attempting to increase the willingness to wor

    The minimum wage will save the government money on benefits, increase income tax revenues and improve the productivity of the economy. Although the minimum wage should improve incentives to find work, in some industries a higher wage bill causes an increase in production cost and may have an adverse effect on output and employment.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work