International economics ECON-370 - Assignment Example

International economics The empirical evidence regarding the benefits of NAFTA includes the fact that there was a wave of increased productivity and exports in Mexico, notably in the period 1987-1993 (Blecker, 7). The interregional free trade had stimulated productivity in Mexico, and thus allowed it to increase its exports, notably to the US, which accounted for 80.2% of its total exports by the close of 2008 (Blecker and Gerardo, 21). There is an indication that large Multinational corporations and financial institutions were major beneficiaries of NAFTA.

Further empirical evidence indicates that there was a gain in the real wage increase for the workers in the US, despite Mexico experiencing a reduction in the real wage rates (Blecker and Gerardo, 18). Therefore, it can be seen that the beneficiaries of NAFTA were specifically the US wage earners, while the losers were the Mexican wage earners. There have been gains in trade that can be attributed to NAFTA for both Mexico and the US. The bilateral trade expanded rapidly in the period 1993-2000.

This gain in trade expansion was notably reaped by Mexico, which replaced Japan as the second largest trading partner of the US, by early 200 (Blecker, 8). Besides NAFTA, there were other factors that positively impacted on the trade between the US and Mexico, which include the separate Free Trade Agreements that both countries had entered into, as well as other macroeconomic factors that include oil prices and exchange rates (Blecker, 5). The US workers have fared well due to NAFTA, since it has caused an increase in their real wage rates, despite causing a reduction of the same, for the Mexican workers (Blecker and Gerardo, 24).

Works CitedBlecker, Robert. The North American Economies after NAFTA: A Critical Appraisal. International Journal of Political Economy, 33.3. (2003): 5–27. Print. Blecker, Robert and Gerardo esquivel. NAFTA, trade and development. CESifo Forum 4, 2010. 17-30. Print.