How Has Nafta Affected the Mexican Economy? Review and Evidence

ByAyhan Kose, Christopher M Towe, Guy M Meredith

April 1, 2004

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper provides a comprehensive assessment of the impact of NAFTA on growth and business cycles in Mexico. The effect of the agreement in spurring a dramatic increase in trade and financial flows between Mexico and its NAFTA partners, and its impact on Mexican economic growth and business cycle dynamics, are documented with reference both to stylized facts and recent empirical research. The paper concludes by drawing lessons from Mexico's NAFTA experience for policymakers in developing countries. The foremost of these is that in an increasingly globalized trading system, bilateral and regional free trade arrangements should be used to accelerate, rather than postpone, needed structural reform.

Subject: Business cycles, Economic growth, Exports, Imports, International trade, North American Free Trade Agreement, Trade balance

Keywords: Business Cycles, dispute settlement process, Exports, free trade, Global, Growth, growth performance, Imports, Mexico, NAFTA, NAFTA experience, NAFTA legislation, NAFTA member, Nafta membership, NAFTA partner, North America, North American Free Trade Agreement, output volatility, Regional Trade, Trade, Trade balance, WP

Pages:
49
Volume:
2004
DOI:
https://doi.org/10.5089/9781451847970.001
Issue:
059
Series:
Working Paper No. 2004/059
Stock No:
WPIEA0592004
ISBN:
9781451847970
ISSN:
1018-5941

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