Question

a.) Evaluate the costs and benefits arising from the creation of NAFTA to the Mexican economy?

b.) Does NAFTA strengthen or weaken the world trading system?

Answer 1

a) Benefits of NAFTA on Mexico:

i. The economic growth of Mexico has remained steady between 1.2 and 2.5

ii. Boosted foreign investment

iii. Mild effect o employment

iv. Exports has increased substantially

Costs of NAFTA on Mexico:

i. Wage growth was not seen and hence failed to reduce inequality.

ii. Mexico became dependent on USA and as a result had to ace the negative impacts of financial crisis.

iii.There have been internal job losses due to subsidized agriculture in the United States.

iv. Subsidized U.S. corn and other commodities has led to an increase in food poverty due to centralized production of agricultural goods.

b) NAFTA  is a three-country accord negotiated by the governments of Canada, Mexico, and the United States that entered into force in January 1994.It eliminated most tariffs on products traded between the three countries. Main aim was liberalization of trade in agriculture, textiles, and automobile manufacturing and also to protect intellectual property, establish dispute resolution mechanisms, and, through side agreements, implement labor and environmental safeguards. It helped USA and Canada expand the market for their goods. There are both advantages and disadvantages of these economic integrations but it does strengthens the world trade.