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Washington, DC – A new report from the Center for Economic and Policy Research (CEPR) finds that 20 years after the North American Free Trade Agreement (NAFTA) took effect, Mexico’s economic performance has been dismal compared to the rest of the region. The report, “Did NAFTA Help Mexico? An Assessment After 20 Years” examines official data sources to track Mexico’s progress under NAFTA and finds slow growth, stagnant wages, and nothing to show in the way of poverty reduction.
“Of course it’s possible that Mexico could have done even worse without NAFTA, but looking at the data it’s tough to see how,” CEPR Co-Director and lead author of the report Mark Weisbrot said today.
Among the paper’s findings:
Mexico ranks 18th out of 20 Latin American countries in growth of real GDP per person, the most basic economic measure of living standards.
From 1960-1980, Mexican GDP per person almost doubled, growing by 98.7 percent. By comparison, in the past 20 years it has grown by just 18.6 percent.
Mexico’s per capita GDP growth of just 18.6 percent over the past 20 years is about half of the rate of growth achieved by the rest of Latin America.
If NAFTA had been successful in restoring Mexico’s pre-1980 growth rate – when developmentalist economic policies were the norm – Mexico today would be a relatively high income country, with income per person significantly higher than that of Portugal or Greece. It is unlikely that immigration reform would be a major political issue in the U.S., as relatively few Mexicans would seek to cross the border.
According to Mexican national statistics, Mexico’s poverty rate of 52.3 percent in 2012 is almost identical to the poverty rate of 1994. Meanwhile, the rest of Latin America saw a drop in poverty that was more than two-and-a-half times as fast as that of Mexico.
Real (inflation-adjusted) wages for Mexico were almost the same in 2012 as in 1994, up just 2.3 percent in 18 years, and barely above their level of 1980.
Unemployment in Mexico is 5.0 percent today, as compared to an average of 3.1 percent for 1990-1994 and a low of 2.2 percent in 2000; these numbers seriously understate the true lack of jobs, but they show a significant deterioration in the labor market during the NAFTA years.
“Mexico did all the things that Washington wanted and was supposed to be the big winner from NAFTA,” said Weisbrot. “But after 20 years, it’s pretty clear that although some billionaires did remarkably well, the Mexican people lost. There should be more discussion of what went wrong, especially in light of the proposed Trans-Pacific Partnership Agreement, which is modelled on NAFTA.”