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The Impact of NAFTA on the United States

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  • Mary E. Burfisher
  • Sherman Robinson
  • Karen Thierfelder

Abstract

We describe the main economic arguments posed for and against the North American Free Trade Agreement (NAFTA) during the U.S. policy debate. To evaluate these arguments, we analyze recent trade data and survey post-NAFTA studies. We find that both the U.S. and Mexico benefit from NAFTA, with much larger relative benefits for Mexico. NAFTA also has had little effect on the U.S. labor market. These results confirm the consensus opinion of economists at the time of the debate. Finally, studies find that trade creation greatly exceeds trade diversion in the region under NAFTA, especially in intermediate goods.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.15.1.125
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Bibliographic Info

Article provided by American Economic Association in its journal Journal of Economic Perspectives.

Volume (Year): 15 (2001)
Issue (Month): 1 (Winter)
Pages: 125-144

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Handle: RePEc:aea:jecper:v:15:y:2001:i:1:p:125-144

Note: DOI: 10.1257/jep.15.1.125
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  1. Rudiger Dornbusch & Alejandro Werner, 1994. "Mexico: Stabilization, Reform, and No Growth," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 253-316.
  2. Robinson, Sherman & Thierfelder, Karen, 2002. "Trade liberalisation and regional integration: the search for large numbers," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 46(4), December.
  3. Anne O. Krueger, 1999. "Trade Creation and Trade Diversion Under NAFTA," NBER Working Papers 7429, National Bureau of Economic Research, Inc.
  4. Arvind Panagariya, 2000. "Preferential Trade Liberalization: The Traditional Theory and New Developments," Journal of Economic Literature, American Economic Association, vol. 38(2), pages 287-331, June.
  5. Joyce Manchester & Warwick Mckibbin, 1995. "The global macroeconomics of NAFTA," Open Economies Review, Springer, vol. 6(3), pages 203-223, July.
  6. Karemera, David & Ojah, Kalu, 1998. "An Industrial Analysis of Trade Creation and Diversion Effects of NAFTA," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 13, pages 400-425.
  7. Steven Berry & Vittorio Grilli & F. Lopez-de-Silanes, 1992. "The Automobile Industry and The Mexico-Us Free Trade Agreement," NBER Working Papers 4152, National Bureau of Economic Research, Inc.
  8. David M. Gould, 1998. "Has NAFTA changed North American trade?," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q 1, pages 12-23.
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