The Disaccumulation of Mexico: Deals to Be Had -- But Not for Mexicans
NAVAL WAR COLL NEWPORT RI JOINT MILITARY OPERATIONS DEPT
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In the early 1980s, Mexico needed to overhaul its economic strategy. It had recently emerged from a period of economic prosperity and had reshaped its investments to benefit from the discovery of oil. When oil prices plummeted, Mexico was again forced to make sweeping economic changes, this time by lowering trade barriers. Subscribing to neoliberal trade reform in 1987, Mexico soon entered into more free trade agreements than any other country. The first, and most extensive, trade agreement it negotiated, the North American Free Trade Agreement NAFTA, lowered trading barriers with the United States and Canada with the hope of economic convergence among the three countries. Mostly because of tax breaks and low labor costs, NAFTA achieved its stated goals, increasing foreign direct investment in Mexico and increasing trade in North America. However, because of Mexicos poor oversight, the country was unable to make a smooth transition from an import substitution economy to a neoliberal one. For Mexico to experience the full potential of NAFTA after two decades of disaccumulation, it must undertake sweeping regulatory reform and substantially increase capital investment in science, technology, and infrastructure. If left unchecked, the agreements destabilizing effects could prove more costly than any economic benefit realized.
- Economics and Cost Analysis
- Government and Political Science