NAFTA Metrics

nafta-metrics15When NAFTA was first announced I started organizing my business to take advantage of it. I was also, and continue to be, a strong advocate of Mexico’s global business realignment that was initiated under the administrations of Carlos Salinas de Gortari and George W.H. Bush which resulted in NAFTA and all of the other trade agreements Mexico has with most of the economic centers across the globe. As an aside, I want to remind my Democrat Party friends that it was Bill Clinton who signed the NAFTA agreement. But, I digress. As a strong advocate of NAFTA, I have been challenged by many who have opposed NAFTA from the beginning. NAFTA fundamentally changed Mexico. Unfortunately, the transformation has been painful and slow. Its goals have slowly begun to materialize and in, my opinion, has made Mexico a stronger nation for it.

I am not going to bore you with detailed economic indicators and evidence of the benefits of NAFTA today because there are so many of them. However, one of the goals of NAFTA has always been the strengthening of the Mexican economy to give Mexicans better economic opportunities. When I read the Pew Research last month that showed that more Mexican immigrants were leaving the United States then coming to it I realized that this is a result of the success of NAFTA.

I realize that many of you will never change your viewpoint about NAFTA, especially those on the border who view NAFTA as destructive. The net migration report made me want to revisit a few economic indicators to see how they have changed over time. There are many economic indicators that need to be analyzed and quantified but nonetheless I wanted to share a few which I find to be interesting and important. Do not worry, I’m sharing these indicators in a graphical format.

Gross Domestic Product Growth 1995-2014

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I realize that the GDP has been erratic, however, this is the result of outside world-wide issues that have affected Mexico, like other countries. It remains my contention that Mexico would not have weathered the economic strife after 9/11 or the economic meltdown in 2008 had it not being for NAFTA. NAFTA allowed Mexico’s economy to move away from an oil-based one to a more diversified one.

The next two graphs demonstrate the growth of the Mexican workforce both as a result of a growing population and its accompanying job opportunity growth. Keep in mind that in the late 1970’s Mexico had a serious problem with an exponentially growing population, a declining access to jobs problem and an economic model centered on oil as the country’s main resource. The Mexican oil reserves have been steadily declining since the 80’s.

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Likely the most affected job sector has been the agriculture sector. Mexico has been transforming itself away from an agriculturally-based economy and oil based one to an industrialized one where products are manufactured and exported to other countries.

Whether we like it or not, industrialization always moves away from an agricultural economy to a manufacturing one. As you can see from the next graph, Mexico’s agriculture employment has been steadily declining. I do not have data for 2012 through 2014, therefore the graph drops to zero after 2011.

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Finally, as many of you know I have been advocating that the Internet is the cornerstone to world’s economy. As you can see from my last graph, Mexico’s access to the Internet has significantly increased. I believe that the access the Internet is not only the key to economic prosperity but the growth of access is directly attributable to NAFTA.

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By the way, I derived the numbers for these data sets from the World Bank datasets.

I realize that many have been hurt by NAFTA but I feel that economies cannot evolve without pain. An example I always like to use is the Walmart model. Many individuals enjoy the low prices that Walmart offers. What many of those individuals do not realize is that Walmart’s prices come at the expense of others low wages. As with everything there is an equal but opposite reaction to economic growth.

As I have time I will put together a more in depth analysis of economic metrics so that we can all have a more meaningful dialog about NAFTA.

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