NAFTA, the Controversy

Abstract

The 2008 U.S. Presidential election highlighted the controversy that exists regarding NAFTA. Four of the most vocal criticisms are the loss of U.S. jobs to Mexico, the loss of the Foreign Direct Investment (FDI) in the United States, no net income gain for the average working American, and illegal migration from Mexico as a result of NAFTA. The research did not validate three of these criticisms. However, illegal migration from Mexico has been an unintended consequence of NAFTA. The data clearly indicate that strong trade growth occurred among the NAFTA partners, but it is difficult to prove conclusively the growth occurred only because of NAFTA. Of the three NAFTA trading partners, Mexico has benefited least from NAFTA as the country is still witnessing high unemployment, strong income disparities, and weak governance indicators.

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