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Has NAFTA changed North American trade?

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  • David M. Gould
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    Abstract

    The controversy over the success or failure of NAFTA is now bleeding over into discussion about the benefits of extending the trade accord to other countries in the Western Hemisphere. The NAFTA debate has typically focused on its impact on employment. But to understand the overall economic effects of NAFTA, it is important to first determine its impact on trade. In this article, David Gould explores NAFTA's effects on North America's trading patterns since its implementation in 1994. He finds that although it is difficult to distinguish any effect of NAFTA on trade between Canada and Mexico or Canada and the United States, trade between the United States and Mexico has significantly increased since 1994.

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    File URL: http://www.dallasfed.org/assets/documents/research/er/1998/er9801b.pdf
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    Bibliographic Info

    Article provided by Federal Reserve Bank of Dallas in its journal Economic and Financial Policy Review.

    Volume (Year): (1998)
    Issue (Month): Q 1 ()
    Pages: 12-23

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    Handle: RePEc:fip:fedder:y:1998:i:q1:p:12-23

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    Keywords: North American Free Trade Agreement ; Free trade;

    References

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    1. Bikker, Jacob A, 1987. "An International Trade Flow Model with Substitution: An Extension of the Gravity Model," Kyklos, Wiley Blackwell, vol. 40(3), pages 315-37.
    2. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-16, March.
    3. Yeats, Alexander, 1997. "Does Mercosur's trade performance raise concerns about the effects of regional trade arrangements?," Policy Research Working Paper Series 1729, The World Bank.
    4. David M. Gould, 1996. "Distinguishing NAFTA from the peso crisis," Southwest Economy, Federal Reserve Bank of Dallas, issue Sep, pages 6-10.
    5. Michael A. Kouparitsas, 1997. "A dynamic macroeconomic analysis of NAFTA," Economic Perspectives, Federal Reserve Bank of Chicago, issue Jan, pages 14-35.
    6. Patrick J. Kehoe & Timothy J. Kehoe, 1994. "Capturing NAFTA's impact with applied general equilibrium models," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 17-34.
    7. Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-81, August.
    8. Christopher J. Neely, 1996. "The giant sucking sound: did NAFTA devour the Mexican peso?," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 33-48.
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    Cited by:
    1. Bichaka Fayissa & Badassa Tadasse & Andrew McColley, 2008. "Does a Unilateral Policy Change Promote Trade? The Case of African Growth and Opportunity Act," Working Papers 200801, Middle Tennessee State University, Department of Economics and Finance.
    2. Fukao, Kyoji & Okubo, Toshihiro & Stern, Robert M., 2002. "An Econometric Analysis of Trade Diversion under NAFTA," Discussion Paper Series a431, Institute of Economic Research, Hitotsubashi University.
    3. John Romalis, 2005. "NAFTA's and CUSFTA's Impact on International Trade," NBER Working Papers 11059, National Bureau of Economic Research, Inc.
    4. Lee, Young-Jae & Kennedy, P. Lynn, 2013. "The Impact Of Nafta On U.S. Agriculture: An Ex-Post, Binary Variable Approach," 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida 142132, Southern Agricultural Economics Association.
    5. Penelope Pacheco-López & A.P. Thirlwall, 2004. "Trade Liberalisation in Mexico: Rhetoric and Reality," Studies in Economics 0403, Department of Economics, University of Kent.
    6. Mark Funk & Erick Elder & Vincent W. Yao & Ashvin Vibhakar, 2006. "Intra-NAFTA trade and surface traffic: a very disaggregated view," Regional Economic Development, Federal Reserve Bank of St. Louis, issue Oct, pages 87-99.
    7. Agama, Laurie-Ann & McDaniel, Christine A., 2002. "The NAFTA Preference and U.S.-Mexico Trade," Working Papers 15873, United States International Trade Commission, Office of Economics.
    8. Ramirez, Miguel D., 2003. "Mexico under NAFTA: a critical assessment," The Quarterly Review of Economics and Finance, Elsevier, vol. 43(5), pages 863-892.
    9. Malaga, Jaime E. & Williams, Gary W. & Fuller, Stephen W., 2001. "US-Mexico fresh vegetable trade: the effects of trade liberalization and economic growth," Agricultural Economics, Blackwell, vol. 26(1), pages 45-55, October.
    10. Howard J. Wall, 2002. "NAFTA and the geography of North American trade," Working Papers 2000-017, Federal Reserve Bank of St. Louis.
    11. M. Ayhan Kose & Christopher M. Towe & Guy Meredith, 2004. "How Has Nafta Affected the Mexican Economy? Review and Evidence," IMF Working Papers 04/59, International Monetary Fund.
    12. Bedassa Tadesse & Bichaka Fayissa, 2008. "The impact of African growth and opportunity act (Agoa) on U.S. imports from Sub-Saharan Africa (SSA)," Journal of International Development, John Wiley & Sons, Ltd., vol. 20(7), pages 920-941.
    13. William C. Gruben, 2001. "Was NAFTA behind Mexico's high maquiladora growth?," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q III, pages 11-21.
    14. Aggarwal, Raj & Kyaw, NyoNyo A., 2005. "Equity market integration in the NAFTA region: Evidence from unit root and cointegration tests," International Review of Financial Analysis, Elsevier, vol. 14(4), pages 393-406.
    15. Darrat, Ali F. & Zhong, Maosen, 2005. "Equity market linkage and multinational trade accords: The case of NAFTA," Journal of International Money and Finance, Elsevier, vol. 24(5), pages 793-817, September.
    16. Azim M. Sadikov, 2008. "External Tariff Liberalization in Caricom," IMF Working Papers 08/33, International Monetary Fund.
    17. Craig Depken & Jon Ford, 1999. "NAFTA as a Means of Raising Rivals' Costs," Review of Industrial Organization, Springer, vol. 15(2), pages 103-113, September.
    18. Mary E. Burfisher & Sherman Robinson & Karen Thierfelder, 2001. "The Impact of NAFTA on the United States," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 125-144, Winter.

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