2009 December 13 Sunday
NAFTA Not Helping Mexico Catch Up

The theory is that lowered barriers for trade will raise economic performance of all the countries in the world and they will all converge on the standards of living seen in the Western industrialized countries. The reality is that Mexico is not closing the gap with the United States over 15 years after the North America Free Trade Agreement was signed.

But a study released Wednesday by the  Carnegie Endowment for International Peace finds that Mexico has fared poorly under the accord.

“After 15 years, it seems clear that Nafta’s promise of broad-based dynamic growth did not come true in Mexico,” write the study’s authors,  Eduardo Zepeda of the Carnegie Endowment and Timothy A. Wise and Kevin P. Gallagher of the  Global Development and Environment Institute at Tufts.

Mexico's economy grew only 1.6% per capita per year since NAFTA passed. Some economists are probably surprised by this result. Oh, and get this: the wage gap between the United States and Mexico actually widened slightly - the opposite of what economists expected.

So what's the problem with economic models? The elephant in the room. If we consider the taboo then Mexico's doing about as well as we should expect. But I expect economic performance of the United States to deteriorate and so NAFTA might eventually be incorrectly praised for a future narrowing of the gap.

Share |      By Randall Parker at 2009 December 13 04:53 PM  Mexico


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