Well, I’m happy to say that the storm has passed and the only damage here is a broken banana tree. So, we will now return to our regularly scheduled blog material.

If you are looking to learn more about NAFTA, Global Exchange is an excellent resource. You can learn more about the disparity between the myths and the realities of NAFTA here.
Let’s take a brief look at those myths and realities now.

Myth #1
NAFTA has been a positive contribution to Mexico’s strategy of export-led growth.

Reality: NAFTA has not helped raise Mexico’s GDP, which has remained stagnant since 1983. The export sector, while it has grown some, has not been able to lead economic growth in the domestic sector as predicted.

Myth #2
NAFTA generated a significant expansion of exports and a sizable surplus in Mexico’s trade with the United States.

Reality: Mexico’s trade deficit with Asia and Europe increased by 600% and 400% respectively since 1994. Mexico exports 90% of its total exports to the United States. What’s more, 50% of Mexico’s exports are due to cheap labor in maquiladoras. The remaining 50% is due to oil and automotive exports. “Thus,” as Global Exchange points out, “exports of cheap labor and natural resources are at the center of the trade surplus with the US.”

Myth #3
NAFTA generates big foreign investment flows into Mexico, opening development opportunities.

Reality: Due to a number of factors, foreign investment has actually dropped from 22% to 18% between 1994 and 2003. That’s a steady decrease since it was at 30% in the 1970s.

Global Exchange