Week Two Individual Assignment: Regional Paper
When it was first being debated, NAFTA's effect on its member countries was anticipated to be enormous. Advocates said that it would create hundreds of thousands of jobs for the United States due to vastly increased exports to member countries. Opponents claimed that NAFTA would destroy jobs rather than create them, due to a massive influx of imports and an exodus of United States firms to Mexico to take advantage of lower wages. In actuality, although NAFTA has had undisputed effects on all member countries, these changes have come nowhere close to where it was predicted. (Griswold, 2003)
However, NAFTA has accomplished its main objective of more trade. Trade of merchandise between the United States and Canada at twice the rate as before NAFTA, and with Mexico, trade has grown three times as fast. The trade of services has not grown at such an exponential rate, but, even still, has contributed about two-thirds of the total increase between the United States and the rest of the world.
(Garten, 2003) In fact, Canada and Mexico are now the United States number one and two trading partners, respectively. Japan follows in a distant third. (Griswold, 2003)
That being said, while NAFTA has had an amazing positive financial effect on Mexico and Canada, for the United States, NAFTA was primarily about foreign policy, rather than about the domestic economy. To this point, the largest benefit to the United States has been to nudge Mexico away from centralized protectionism and towards democratic capitalism. Mexico has continued to make drastic changes in its political and economic policies. For the first time since the 1970s, Mexico avoided an economic crisis due to the election cycle, and has successfully moved beyond the traditional boom-and-bust, high-inflation, and debt-ridden model that characterized it,