Lessons from NAFTA: for Latin America and the Caribbean (Latin American Development Forum)

Analyzing the experience of Mexico under the North American Free Trade Agreement (NAFTA), the authors draw lessons for other countries considering free trade agreements with the United States. The authors conclude that NAFTA raised external trade and foreign investment inflows and had a modest effect on Mexico’s average income per person. It is likely that NAFTA also helped achieve a modest reduction in poverty and an improvement in job quality. However, major obstacles remain to Mexico’s long term development―NAFTA is not enough. The main lesson for other countries is that free trade agreements offer opportunities to accelerate economic growth, but do not guarantee it.

Business & Money

Lederman, Daniel

Maloney, William F.

Servén, Luis

Economics

Stanford Economics and Finance

Analyzing the experience of Mexico under the North American Free Trade Agreement (NAFTA), the authors draw lessons for other countries considering free trade agreements with the United States. The authors conclude that NAFTA raised external trade and foreign investment inflows and had a modest effect on Mexico’s average income per person. It is likely that NAFTA also helped achieve a modest reduction in poverty and an improvement in job quality. However, major obstacles remain to Mexico’s long term development―NAFTA is not enough. The main lesson for other countries is that free trade agreements offer opportunities to accelerate economic growth, but do not guarantee it.

Stanford University Press

That raising income levels alleviates poverty, and that economic growth can be more or less effective in doing so, is well known and has received renewed attention in the search for pro-poor growth. What is less well explored is the reverse channel: that poverty may, in fact, be part of the reason for a country's poor growth performance. This more elaborated view of the development process opens the door to the existence of vicious circles in which low growth results in high poverty and high poverty in turn results in low growth. 'Poverty Reduction and Growth' is about the existence of these vicious circles in Latin America and the Caribbean about the ways and means to convert them into virtuous circles in which poverty reduction and high growth reinforce each other. Through its analysis of fresh data and the attention it pays to issues such as the persistent inequality in the region, the role played by various microdeterminants of income, and the potential existence of human capital underinvestment traps, this title should be a valuable contribution to the current regional debate on poverty and growth, a debate that is critical to the design of policies conducive to enhancing welfare in all is dimensions among the poor of Latin America and the Caribbean.

Poverty Reduction and Growth: Virtuous and Vicious Circles (World Bank Latin American and Caribbean Studies)

Perry, Guillermo E.

Lopez, J. Humberto

Arias, Omar

World Bank Publications

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