Graduate Thesis Or Dissertation
 

The effects of North American Free Trade Agreement on sustainable and human development in Mexico

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https://ir.library.oregonstate.edu/concern/graduate_thesis_or_dissertations/6108vg54w

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  • The effects of trade liberalization and trade integration can be seen in many developing countries around the world. While freer trade can be said to create benefits from efficient allocation of resources, it does not ensure that gains from trade will be allocated equitably in a society. Nor does it ensure the preservation of natural resources. By estimating the set of reduced-form equations based on the study of Grossman and Krueger (1995), we calculated the relationship between environmental, employment, health, and Foreign Direct Investment factors and economic growth in Mexico and found that the effects of the North American Free Trade Agreement on Mexican sustainable and human development are ambiguous. The overall environmental degradation in Mexico cannot be considered a direct result of NAFTA integration because the eroded environmental conditions began well before 1994 and present a mixed picture thereafter. Moreover, NAFTA may well have produced some positive impacts on human development and employment in Mexico. Employment in service industries has increased since 1994, although higher percentages of better educated workers are unemployed. Education and health standards also show some improvement, but the sheer expansion of the Mexican economy due to globalization probably accounts for most of it. Most worrisome is the persistence of unemployment and extreme income inequality in Mexican society. Contrary to our expectations, therefore, NAFTA does not create solely negative impacts on the environment in Mexico, and, surprisingly, it has produced some positive outcomes for human development. Ultimately, however, the Mexican government must take more responsibility in pursuing human and sustainable development. Trade expansion and economic growth cannot by themselves guarantee continuous improvement in environmental conditions or in overall human welfare in Mexico. All our conclusions, however, are tenuous in that we encountered severe problems both in the data and in the statistical results. Perhaps the most significant discovery of this research is the need to question data sources and to doubt contradictory or inconsistent statistical findings.
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