Trade liberalisation in Mexico: rhetoric and reality

Penélope Pacheco-López () and Anthony Thirlwall

BNL Quarterly Review, 2004, vol. 57, issue 229, 141-167

Abstract: Trade liberalisation in Mexico started in a significant way in 1985/86, and was consolidated by the NAFTA agreement 1994. Mexico was expected to benefit in terms of increased export growth, employment, real wages, and above all, a faster rate of economic growth. In practice, there has been a divorce between rhetoric and reality. The growth of GDP post-liberalisation has been only one-half that pre-liberalisation. This paper gives three explanations. Firstly, export growth has hardly changed. Secondly, there has been a sharp increase in the propensity to import (partly related to US direct foreign investment) which has reduced the growth of GDP consistent with a sustainable balance of payments equilibrium on current account. Thirdly, liberalisation has been used as a substitute for a development strategy.

Keywords: Agreement; Exports; GDP; Liberalization; NAFTA; Trade (search for similar items in EconPapers)
JEL-codes: F13 F14 F32 O19 O24 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (20)

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