North American Free Trade: Assessing the Impact
A conference concentrating on the comparison of quantitative studies produced "a consensus that the direct economic effects of NAFTA will be small for both Mexico and the United States." But, say the editors, this kind of "static analysis" misses many of the more important dynamic elements of NAFTA, such as the effects of a large inflow of new capital and the return of capital that fled Mexico in the early 1980s.
Related
California is the most populous state in the United States. Its gross economic product is seventh in the world, well ahead of China or Canada. Given its massive size and the fact that the export-driven sector is the only part of its economy that shows any potential for long-term growth, California is increasingly adopting its own foreign policy. In turn international economic trends are having strong regional effects from San Diego to San Francisco. At the center of this new interdependence lies the North American Free Trade Agreement and the pivotal bilateral tie between Mexico and California.
The Salinas regime has ardently pursued the North American Free Trade Agreement as a silver bullet to kill myriad political and economic problems. But NAFTA as it stands would exacerbate many of Mexico's enduring disparities and injustices. Short term adjustment costs and the possibility of backsliding on political reform have largely been overlooked. NAFTA must be designed to contribute to political reform. Otherwise, postponing the accord would not weaken Mexico-only Salinas.
Exaggerated claims and charges are obscuring the facts about the North American Free Trade Agreement. Over time, in almost every instance, what's good for Mexico would also be good for the United States.

Sign-up for free weekly updates from ForeignAffairs.com.