It is now over 23 years since NAFTA was implemented , allowing Mexico to inter into a new trading agreement with the United States and Canada. At the time it was claimed, and forecast, that the trading deal would increase Mexico’s growth and development. This paper contrasts the production of the Mexican economy with the region since NAFTA, relying on the available economic and social indexes, and with its own long ago economic performance. The results show:
Mexico position 15th of 20 Latin American countries in growth of actual GDP per capita from 1994 to 2016, the most basic economic evaluation of living standards
Mexico underwent a collapse of economic developing after 1980, with Latin American per capita GDP growing by just 9 percent, and Mexico by 13 percent, from 1980 to 2000.
Mexico’s per capita GDP growth of just 1 percent yearly over the past 23 years is largely less than the rate of growth of 1.4 percent accomplished by other Latin America’s countries.
If NAFTA had been effective in bringing back Mexico’s pre-1980 growth rate — when developmentalist economic strategy were the norm — Mexico today would be a high income country, with income per capita notably exceeds that of Portugal or Greece. It is doubtful that immigration reform would have caused an important political issue in the United States, since relatively few Mexicans would seek to cross the border.
The poverty rate in Mexico in 2014 was 55.1 percent which is much higher than the poverty rate in 1994, according to Mexican national statistics. Therefore, there were about 20.5 million more Mexicans living below the poverty line as of 2014 than in 1994.
The rest of Latin America experienced a decline in poverty for more than five times as much as that of Mexico: 21 percentage points (from 46 to 25 percent) for the rest of Latin America, versus 3.9 percentage points (from 45.1 to 41.2 percent) for Mexico.
Wages for Mexican were almost the same in 2014 as in 1994, with a very slight decrease in 4.1 percent over 20 years, and barely above their level of 1980.
Unemployment in Mexico is 3.8 percent today, as compared to an average of 3.1 percent for1990–94 and a low of 2.2 percent in 2000; these numbers seriously understate the true lack of jobs, but they do not show an improvement in the labor market during the NAFTA years.
NAFTA also had an adverse impact on agricultural employment, as US supports corn financially and other products wiped out small farmers in Mexico. From 1991 to 2007, 4.9 million Mexican family farmers were repositioned; while seasonal labor in agro-export industries increased by about 3 million. This meant a net loss of 1.9 million jobs.
The very week productivity of the Mexican economy has led to a rise in emigration to the United States. From 1994 to 2000, the annual number of Mexicans emigrating to the United States increased by 79 percent. The number of Mexican-born residents living in the United States more than doubled from 4.5 million in 1990 to 9.4 million in 2000, and peaked at 12.6 million in 2009.
In January of 1994, when the North American Free Trade Agreement was launched, it took Mexico to a new level of commercial agreement with the United States and Canada.
NAFTA’s terms, which were put into effect gradually through January 2008, produced for the the complete removal of most tariffs and fees on products and services traded between those three countries. Liberalization and freeing of trade in agriculture and farming , textiles, and automobile manufacturing was their main core of attention. The treaty also was directed to protect intellectual assets, initiate a system of dispute-resolution , and through mutual accordance, implement labor and environmental protection.
NAFTA essentially has reformed North American economic relationship, influencing a novel integration between Canada and the United States’ advanced economies and Mexico, a growing country. NAFTA appreciated bipartisan support—it was mediated by Republican President George H.W. Bush and passed through Congress and carried out under Democratic President Bill Clinton. It uplifted and encouraged a more than tripling of regional merchandising and cross-border investment between the three countries also developed considerably . Yet NAFTA has remained a lasting target in the broader argument over open trade. President Donald J. Trump says the agreement has reversed U.S. manufacturing production, and jobs, to Mexico, and in August 2017 his administration relaunched negotiations with Canada and Mexico with the goal of reforming it.
It is doubtful to say that Mexico would have done better in the presence of NAFTA. In fact, we can demonstrate the productivity rate of Mexico with other regional countries since 1994 using available economic and social indexes.