How does mexico benefit from nafta

This is an average annual growth rate of just 1. Source: n. From these numbers, and in the absence of any natural disaster or war in Mexico during the past decades that could account for such poor economic performance, it would be difficult to argue that Mexico would have done much worse in the absence of NAFTA. This can be seen in Figure 2A. From to , Mexico almost doubled its income per person, a growth rate that was higher than that of Latin America as a whole.

If this growth had continued, Mexico would be a high-income country today. However, both Mexico and the region suffered a sharp slowdown in the growth of income per capita over the following 20 years, , a period that coincided with first a badly handled debt crisis in the early s and then a number of neoliberal policy changes.

Regional growth of GDP per capita dropped from 87 percent for the prior two decades, to just 9 percent for , or just 0. In the twenty-first century, there was something of a rebound in the region, with per capita GDP growth averaging 1. This is shown in Figure 2B. It is also worth examining where Mexico would be today if its income per person had continued to grow at the rate that it did over the two decades prior to This is shown in Figure 3.

As would be expected during such a period of very little economic growth, the poverty rate was not reduced in Mexico; in fact, it increased. We can also compare what happened to poverty in Mexico with the region as a whole.

This can be seen in Figure 5. For the region as a whole, there was no progress in reducing the poverty rate for more than two decades, from to As seen in Figure 5 , the poverty rate for the region then fell substantially, from However, excluding Mexico, poverty in the region fell more than five times as much, from 46 percent to 25 21 percentage points. Figure 7 shows the path of real inflation-adjusted wages in Mexico from to Wages did not recover to their pre-crisis level until , 11 years later.

By , they were only 4. The minimum wage, adjusted for inflation, fared even worse. From to , it fell by Figure 7 Mexico: Real Average Wages. Unemployment is shown since ; data on underemployment are only available since Although the unemployment rate jumped during the peso crisis and then fell steadily until , it then increased again until Unemployment has averaged 4.

These numbers are small in absolute terms, because the official unemployment rate does not capture the full extent of unemployment in Mexico. In order to be counted as unemployed, a worker has to have not worked even one hour in paid activity during the reference period in which the survey was taken, and he or she must have been actively looking for work.

But there are many people who would not be counted as unemployed in this data, despite not being employed. This is partly because Mexico has very little social safety net and no unemployment insurance outside of Mexico City.

For this reason, heads of household especially will generally engage in some kind of economic activity in order to survive. A somewhat better measure of the state of the labor market is underemployment, also shown in Figure 8 , but data only begin in This includes workers who have a demonstrated need and ability to work more hours but were not able to do so due to labor market conditions.

This was 8 percent for , as compared to an annual average of 7. In any case, it would be difficult to make the case from the available data that NAFTA had succeeded in reducing either unemployment or underemployment. Figure 9 shows the Gini coefficient for household income for the years It shows a decline from 0. Figure 9 Mexico: Gini Coefficient. The decline in inequality is something of a mystery, during a period in which real wages stagnated, unemployment and underemployment did not improve, income growth was very slow, and the national poverty rate was higher in than in One possible explanation may be in the data.

In general, in the kind of survey data on which these statistics are based, a large part of the income of the wealthiest households is not reported. For example, in the United States from to , the Gini coefficient using income tax data and including capital gains showed an increase of Peterson Institute for International Economics.

Economy and on Specific Industry Sectors ," Page 6. The Wharton School of the University of Pennsylvania. Office of the United States Trade Representative.

Central Intelligence Agency. United States Chamber of Commerce. Accessed Dec. United States Government Accountability Office. American Society of International Law. The White House. Economy and on Specific Industry Sectors ," Page Actively scan device characteristics for identification. Use precise geolocation data. Select personalised content. Create a personalised content profile. Measure ad performance. Select basic ads.

Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. World Economy Trade Policy. Table of Contents Expand. Table of Contents. Quadrupled Trade. Lowered Prices. Increased Economic Growth. Created Jobs. Increased Foreign Direct Investment. Reduced Government Spending.

By Kimberly Amadeo. It has opened up new export opportunities, acted as a stimulus to build internationally competitive businesses, and helped attract significant foreign investment. This integration helps maximize our capabilities and make our economies more innovative and competitive. The Government of Canada plans to provide periodic updates and summaries of the consultations, including stakeholders consulted, where consultations took place, and what topics were discussed during the consultations.

Once the Canada Gazette notice is issued on June 3, , the Government will accept written submissions until July 18, However, NAFTA consultations are an ongoing process that will be carried over throughout the negotiations. It also paved the way for unprecedented economic integration between partners, creating a platform where companies from Canada, the U. NAFTA came into effect on January 1, , creating the largest free trade region in the world at that time, generating economic growth and helping to raise the standard of living for the people of all three member countries.

Given that the Agreement is over 23 years old, there are many clarifications and technical improvements that could be made in all trade areas covered by NAFTA, such as labour, the environment, or culture, for example.

Some Total merchandise trade between Canada and the United States more than doubled since , and grew nine-fold between Canada and Mexico. Canada is the largest merchandise export market for the U. In , the U.