Mexicos Economy Since NAFTA

Developments in Mexican Economy Post-NAFTA

Currently , Mexican economy is shaped by its affiliation to the North American Free Trade Agreement (NAFTA . To a significant extent , Mexican affiliation to the NAFTA hallmarked the change from an import-substitition and state-owned industrialization strategies of Mexico to that of trade liberalization , governmental and legal reforms and as an export-oriented country (Moreno-Brid , Valdivia and Santamaria 2005 . Along with these changes , the manufacturing sector of Mexico became one of the fastest growing in the world becoming the export platform of the United States and Canada- two of

the biggest economies in the world

Hence , with the changes in the orientation of the economy of Mexico have been changes in its governmental , legal and economic development . For one , there has been a rapid increase in the Foreign Direct Investment (FDI ) to Mexico . Mexico 's FDI surged following the NAFTA passage particularly in making Mexico a venue for a good export platform in industries that are considered to be labor-intensive such as the manufacturing industry which drove domestic exports from US 44 billion in 1993 to US 85 in 2002 thereby , making a 95 .2 increase (Scott , 2003 Consequently , it is estimated that about 70 of the increase in Mexican FDI has been largely attributed to its joining the NAFTA (Scott , 2003 With this development , Mexico can be considered to be one of the primary trading partners of the biggest economy in the world- the US . Thus , the advantage of having this privilege had been translated in the growth in the GDP of the country

Second , Mexico 's manufacturing industry- the sector that experienced the most growth most following its joining with NAFTA . As a response , Mexico also readied its governmental and legal infrastructure . Together with the changes in the market orientation of the country are the changes in the laws governing state-owned enterprises which were liberalized , the shredding off of governmental protectionism and laws governing the protection of Mexican workers (Fry and Bybee , 2002 . Moreover , Mexico also expanded its goods from solely relying on oil-exports to include industries in manufacturing such as clothing , vehicles , auto parts and electronic parts (Moreno-Brid , Valdivia and Santamaria , 2005

Third , in its domestic markets what the NAFTA has done was to increase the efficiency and productivity of small and medium scale enterprises as well as international companies due to the increasing competitiveness within domestic markets . This has led to the introduction of technology and modernization not only of equipments but also of training and management (Audley , et al , 2003 . However , an important consideration in this occurrence is that small and medium enterprises has been struggling to compete with international companies and TNCs in terms of producing better quality products at more affordable prices . Apparently , the inability of these SMEs to compete is putting a strain on the increase in the number of SMEs in the country (Moreno-Brid , Valdivia and Santamaria , 2005

Finally , following the NAFTA , Mexico also experienced significant increase in developmental aids coming from the IMF and the World-Bank and even...