The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

North American Free Trade Agreement (NAFTA)

  • Gordon H. Hanson
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_2403

Abstract

The North American Free Trade Agreement (NAFTA) eliminated trade barriers on most products between Canada, Mexico, and the United States. NAFTA included provisions to remove restrictions on cross-border investment, expand service trade, and address environmental and labour standards. Post-NAFTA increases in trade between member countries were matched by comparable decreases in their trade with the rest of the world. Freer trade has brought a shift in economic activity within Mexico and the United States towards their shared border and an increase in direct investment from the United States to Mexico. In Mexico these developments have contributed to greater wage inequality.

Keywords

Canada–United States Free Trade Agreement Computable general equilibrium models Foreign direct investment International migration North American Free Trade Agreement (NAFTA) Regional and preferential trade agreements Rules of origin Tariffs Trade diversion Trade policy, political economy of World Trade Organization 
This is a preview of subscription content, log in to check access

Bibliography

  1. Baldwin, R., and C. Magee. 2000. Is trade policy for sale? Congressional voting on recent trade bills. Public Choice 105: 79–101.CrossRefGoogle Scholar
  2. Brown, D., A. Deardorff, and R. Stern. 1992. North American integration. Economic Journal 102: 1507–1518.CrossRefGoogle Scholar
  3. Chiquiar, D. 2005. Why Mexico’s regional income convergence broke down. Journal of Development Economics 77: 257–275.CrossRefGoogle Scholar
  4. Estevadeordal, A., and K. Suominen. 2005. Rules of origin in preferential trading arrangements: Is all well with the spaghetti bowl in the Americas? Economia 5: 63–69.Google Scholar
  5. Feenstra, R., and G. Hanson. 1997. Foreign direct investment and relative wages: Evidence from Mexico’s maquiladoras. Journal of International Economics 42: 371–394.CrossRefGoogle Scholar
  6. Hanson, G. 2001. U.S.–Mexico integration and regional economies: Evidence from border-city pairs. Journal of Urban Economics 50: 259–287.CrossRefGoogle Scholar
  7. Hanson, G. 2006. Illegal migration from Mexico to the United States. Journal of Economic Literature 44: 869–924.CrossRefGoogle Scholar
  8. Hanson, G., and A. Spilimbergo. 1999. Illegal immigration, border enforcement and relative wages: Evidence from apprehensions at the U.S.–Mexico border. American Economic Review 89: 1337–1357.CrossRefGoogle Scholar
  9. Hufbauer, G., and J. Schott. 2005. NAFTA revisited: Achievements and challenges. Washington, DC: Institute for International Economics.Google Scholar
  10. Romalis, J. 2005. NAFTA’s and CUSFTA’s impact on international trade, Working paper no. 11059. Cambridge, MA: NBER.CrossRefGoogle Scholar
  11. Tornell, A., F. Westermann, and L. Martinez. 2003. Liberalization, growth, and financial crises: Lessons from Mexico and the developing world. Brookings Papers on Economic Activity 2003(2): 1–88.CrossRefGoogle Scholar
  12. Trefler, D. 2005. The long and the short of the Canada-U.S. Free Trade Agreement. American Economic Review 94: 870–895.CrossRefGoogle Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Gordon H. Hanson
    • 1
  1. 1.