The Disaccumulation of Mexico: Deals to Be Had -- But Not for Mexicans
Abstract
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 Mexico's 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 agreement's destabilizing effects could prove more costly than any economic benefit realized.
Document Details
- Document Type
- Technical Report
- Publication Date
- Oct 28, 2011
- Accession Number
- ADA555374
Entities
People
- William H. Mallory
Organizations
- Naval War College