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The effects of NAFTA on US trade, jobs, and investment, 1993–2013

Robert E. Scott
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Robert E. Scott: Economic Policy Institute, Washington, D.C., USA

Review of Keynesian Economics, 2014, vol. 2, issue 4, 429-441

Abstract: Between 1993 and 2013, the US trade deficit with Mexico and Canada increased from $17.0 to $177.2 billion, displacing 851 700 US jobs. All of the net jobs displaced were due to growing trade deficits with Mexico. The number of US jobs displaced by trade deficits with Canada declined slightly between 1993 and 2013. Prominent economists and US government officials predicted that the North American Free Trade Agreement (NAFTA) would lead to growing trade surpluses with Mexico and that hundreds of thousands of jobs would be gained. The evidence shows that the predicted surpluses in the wake of NAFTA's enactment in 1994 did not materialize. Growing trade deficits and job displacement, especially between the United States and Mexico, were the result of a surge in outsourcing of production by US and other foreign investors. The rise in outsourcing was fueled, in turn, by a surge in foreign direct investment into Mexico, which increased by more than 150 percent in the post-NAFTA period.

Keywords: North American Free Trade Agreement (NAFTA); employment; manufacturing; US economy; Mexican economy; Canadian economy; regional economic integration (search for similar items in EconPapers)
JEL-codes: F15 F16 O24 N10 (search for similar items in EconPapers)
Date: 2014
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