Review of Keynesian Economics

The Mexican and US economies in the NAFTA era

Gregorio Vidal *

Keywords: NAFTA, manufactures, trade policy

Abstract

This article analyses several aspects of the divergent economic evolution of North America at the 20-year mark of the North American Free Trade Agreement (NAFTA), with a particular focus on the Mexican economy. Mexico's principal economic role in NAFTA has been that of a secondary exporter, with automobiles, electronics, and industrial equipment leading the way. Yet, as Mexico has no endogenous base for industrial growth, there are no Mexican companies that export manufactures linked to industrial diversification, improvements in productivity, increases in formal employment, and the real income of growing groups of workers. For Mexico, this has meant the multiplication of activities with little or no technological content, the growth of the informal economy, consistently high levels of unemployment, and secular economic stagnation.

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