Mexico has one of the highest rates of income inequality in the world (OECD 2008). Southern
regions of Mexico feel that NAFTA hurt them, to primarily benefit northern states. “NAFTA did
not reach the South due to obstacles to economic development that afflict the Southern states, such
as insufficient infrastructure and access to telecommunications services, and social instability and
governance” (Esquivel et al. 2002). Despite anecdotal evidence, there is little empirical work looking
at whether NAFTA made this disparity worse or better. Since NAFTA was one of the early bilateral
trade agreements to link a developing country to a large developed economy, its effects may shed light
on the other bilateral trade agreements currently under negotiation. Further, understanding what
caused regions to be harmed by trade might facilitate the development of programs to give regions
better access to this new, large market, or, at a minimum, might allow for targeted compensation.
Mexico has one of the highest rates of income inequality in the world (OECD 2008). Southernregions of Mexico feel that NAFTA hurt them, to primarily benefit northern states. “NAFTA didnot reach the South due to obstacles to economic development that afflict the Southern states, suchas insufficient infrastructure and access to telecommunications services, and social instability andgovernance” (Esquivel et al. 2002). Despite anecdotal evidence, there is little empirical work lookingat whether NAFTA made this disparity worse or better. Since NAFTA was one of the early bilateraltrade agreements to link a developing country to a large developed economy, its effects may shed lighton the other bilateral trade agreements currently under negotiation. Further, understanding whatcaused regions to be harmed by trade might facilitate the development of programs to give regionsbetter access to this new, large market, or, at a minimum, might allow for targeted compensation.
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