The Economic Impact of NAFTA's Policy in the Development of Mexico (Essay Sample)

The economic impact of NAFTA’s policy in the development of Mexico
Introduction
Modern development especially in trade has led to the explosion of environmental problems. As a result, there have been healthy issues related to the expansion of markets. Citizens need skills on how to handle environmental issues. Equally, Mexican, US, and Canadian government signed a trilateral agreement which has contributed towards the coming of environmental issues. Since the development and implementation of NAFTA, 1994; Mexico has experienced economic and environmental changes due to the expansion of markets. However, from 1995, economists and analysts have developed a critical eye towards this trade policy. Some say that NAFTA has a negative impact while others stick to the positive changes of this policy. It is undeniable that NAFTA has brought dramatic changes in trade between three countries; Mexico, Canada, and US especially in the widening of trade relations, market expansion and promoting healthy global competition specifically in North America (Cuevas, Messmacher, & Werner, 2005).The policy came into being under three prominent leaders of the time, Bill Clinton (US), Jean Chrétien (Canadian prime minister) and Mexico's president, Carlos Salinas. This deal swept several import tariffs that could hinder effective running of foreign trades. It framed a well-structured process of resolving disputes, set environmentally friendly guidelines and established regional labour.
Section 1: The importance and relevancy of Healthy Policy
The agreement, which brought together North America, used different ways to improve trade industry and healthy safety. Reports from journals show how NAFTA contributed to the emergency of environmental disasters (Durand, 2007). Of these three countries, Mexico before is repeatedly found to be the most damaged or affected. It began with the need for local Mexican farmers wanting to farm more by clearing forests, and there was a huge boom in the mining sector whereby local landowners were affected. It is through these industries and erroneous activities that the pollution of the environment started. It finally translated to health issues. Equally, Mexican citizens were forced to migrant by their movement were not documented by the government. NAFTA agreement wanted to eliminate or reduce barriers to investment, eliminate trade tariffs and set a clear dispute resolution mechanism. It is through these three pillars that led to the positive changes in the economic development in North America specifically Mexico.
Mexico, in particular, has enjoyed the role played by NAFTA. Due to subsidized agricultural products, local people enjoyed a variety of products. It brought in more sophisticated ways of producing and the caring of citizens. In particular, medical industry rose significantly (Durand, 2007). The coming of US medical practitioners combined with what Mexico doctors offer to significantly improve healthy status of their citizens. NAFTA passed on particular rules that are aimed at reducing healthy risks. Trade activities also were customized such that they meet health standards of the region. Economists noted that this deal lowered unemployment rates than it was before 1994. Unemployment crises like low payments, low-productivity jobs, job insecurity and poor working conditions are major aspects that have been abolished via NAFTA policies (Cuevas, Messmacher, & Werner, 2005). Indeed, these changes can as results of removing some restrictions on foreign investors. Investors created employment and unemployment rate significantly dropped from 51% to 39%. Expansion of markets especially in the agricultural sector in turn it improved living standards for Mexican people living in remote areas. As a result, Mexico’s exports increased from 92 billion to 397 billion. Notably, since import tariffs for agricultural products were completely removed, from 1996 onwards, Mexican farmers enjoyed export of their products to these countries. By 2004, it was estimated that Mexico’s export of farm products increased by 39% (Durand, 2007).
Consumption of sugary beverages (attracting high mortality rate and diabetes incidences)
NAFTA is found to contribute to diseases like blood pressure and diabetes. It is through NAFTA policies that Mexico gained trade surplus in export services. From 1998 to 2007, Mexico’s exports to US and Canada had greatly increased from 98 billion in 1998 to 103 billion in 2008. However, since 2008 to date, the increase rate dropped. For instance, in 2012, service export increased only by 22 billion. In addition, prices of foods came down due to increased imports and exports. It encouraged healthy and safe competition that in the long run benefited ordinary Mexican people. Furthermore, untapped resources by then were maximally utilized. Oil and local products are among the products that found new markets. In this way, regional development improved enormously. Local people who initially worked for low paying jobs in small enterprises were able to increase their incomes. This was a blessing in disgust according to many scholars. For instance, beverages with too much sugar were introduced into Mexico. This situation invited diseases like diabetes, blood pressure or heart attack. As a result, mortality rate increased, and many people’s nutrition was negatively affected.
Section 2: Connecting the Policy to the Economics of Development
Definition of two key economic concepts used in this analysis
Human Development Index (HDI) is a special tool in statistics that uses four criteria: years of schooling, life expectancy, and GDP and education level to rank nations’ economic and social development.
Gross Domestic Product (GDP) is generally defined as a monetary value of a country’s annual products and services that were manufactured within its borders.
Measuring NAFTA’s healthy effects on economic development
Healthy effects brought by NAFTA can be directly connected to the development of the economy. Effects of increased clearing of forests, inviting enormous mining and consumption of industrial products had a significant impact on one’s health and the country’s economy. The only technique of understanding the effects brought by NAFTA in the economy is to understand how these effects are measured and quantified. Reasonably, economists attempt to evaluate and measure effects of NAFTA by looking at the economic status of Mexico before the implementation of NAFTA (before 1994) and after the full force of this trade agreement. This was erroneous since some factors were not catered for (Perkins, Radelet, & Lindauer, 2013). Dwight came up with a more sophisticated method of measuring it. NAFTA measurement can be professionally done by watching the effectiveness or productivity generated from specialized production, investments (including foreign), trade and competition (Cuevas, Messmacher, & Werner, 2005). In his case, he highly uses counterfactual simulation whereby he tried to estimate how high growth and trade are in among the Mexican citizens. In doing this, the measurement requires both statistical data derived from the labour department, export, and import rates through interviews and questionnaires. It also entails the extraction of information from employment areas where job losses/gain and level of salaries are measured.
Gross Domestic Product (GDP)
Notably, Mexico relies heavily on its exports. Fortunately, Mexico exports many products to US, which is among the trilateral trade agreement. As per Dwight (1998), the most effective way of quantifying economic progress from the NAFTA’s side is by using GDP per an individual since Mexico was under underdeveloped countries. Looking at this health policy, it has served the three states for more than 20 years. Mexico, in particular, there was a significant increase in the GDP from 1994-2009 (Durand, 2007). It begins by analyzing the individual incomes per year. The end results indicated that GDP had almost doubled under the forces of NAFTA policies. However, two events which are separate from NAFTA have found to affect Mexico’s GDP negatively or positively. They include unilateral trade that boosted its development while the 1995’s currency crisis contributed negative to Mexico’s development.
NAFTA (The northern American free trade agreement) has positively affected Mexico’s economic development through the graph of development is a little shaggy from the GDP figure since the year 1985. It has given a gradual increase in the figure from time to time. A major part of the economy relies on the concentration over exports that happen in the country. NAFTA was able to give a slight lift Mexico from the devaluation of the currency that it had to face. FTA signing gave an excellent start to the county’s economy, and the growth rate of GDP went over 6.2% annually in the period of 20 years, that is, from the year 1960 to 1980. Post this was a crisis that Mexico had to face. GDP went upside down, and it started fluctuating from then on.
Furthermore, NAFTA contributed towards the wellbeing of Mexico citizens. Statistically, from the year 1999 to 2006, Mexico’s exports significantly increased due to the coming of free markets. Indeed, investors from US and Canada came in to exploit untapped resources such as oil and land. Eventually, urbanization and industrialization expanded. With improvement in health and education services, many people especially Mexico’s indigenous people significantly increased their annual income as a result of this free trade.
Human Development index (HDI)
GDP growth came back as it started, and it declined a level and had a drop of 6.2% in the year of 2000. Post thi...