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1. Great Expectations: Mexico's Short-lived Convergence under NAFTA

Author:
Carol Wise
Publication Date:
01-2007
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
Upon Mexico's entry into the North American Free Trade Agreement (NAFTA), neo-classical trade theory assumed, first, that it had the greatest potential for higher rates of growth, productivity and overall welfare gains due to its relatively underdeveloped status; and second, that Mexico's adjustment to an integrated, liberal economy would be the most painful but also the most beneficial. It was envisioned that the blending of Mexico's endowment factors – cheap labour, natural resources, and proximity to the US market – with the abundant capital and advanced technology of Canada and the US would maximize on NAFTA's competitive potential over the long-term. However, these expectations have yet to fully materialize. This paper reviews the convergence/divergence debate with regard to NAFTA and Mexico, and analyzes the empirical data that have been used to tout both the benefits and the costs of asymmetrical integration. In light of the standstill in Mexico's per capita growth since 2001, this paper concludes with a critique of the potential role of NAFTA as a development tool and argues that the steep regional asymmetries call for a more proactive continental strategy.
Topic:
Development, Economics, and Markets
Political Geography:
America, Central America, and Mexico

2. The Politics of Free Trade in the Western Hemisphere

Author:
Manuel Pastor and Carol Wise
Publication Date:
08-1996
Content Type:
Working Paper
Institution:
The North-South Center, University of Miami
Abstract:
Just as the 1980s now stand out as the decade of the debt crisis in Latin America, the 1990s have become the free trade decade. After a number of failed attempts at trade liberalization during the 1970s, many states in the region now have made dramatic progress in their efforts to reduce tariffs and eliminate quantitative restrictions (QRs) (see Table 1). The strongest evidence of this new openness is reflected in Mexico's 1994 entry into the North American Free Trade Agreement (NAFTA) with the United States and Canada, the stated intention at the 1994 Summit of the Americas in Miami to develop a plan for the full expansion of hemispheric free trade, and the ongoing consolidation of such subregional trade pacts as South America's Southern Cone Common Market (MER - COSUR), including Argentina, Brazil, Paraguay, and Uruguay.
Topic:
Development, Government, Industrial Policy, and International Trade and Finance
Political Geography:
United States, Canada, Brazil, South America, Uruguay, Caribbean, North America, and Paraguay