Economics

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Left in the Agricultural Dust: the Effects of the North American Free Trade Agreement on the Mexican Agricultural Sector
(2008) Wilson-Elizondo, Alexandra; Jilani, Saleha
This paper investigates the claims of Mexican farmers that the North American Free Trade Agreement (NAFTA) and U.S. agricultural subsidies are to blame for their recent unemployment and inability to compete in the global and domestic markets. This paper begins with an analysis of employment trends, changes in Mexico’s GDP composition, Mexico’s trade balance, and Mexico’s and the U.S.’ level of subsidies, from approximately the year 1990 to 2005. The study finishes by using time series data and an empirical trade model to estimate the effects of U.S. subsidies on Mexico’s agricultural trade ratio. The results indicate that U.S. agricultural subsidies have no effect on the Mexican agricultural trade ratio, however NAFTA itself does. The results could indicate that U.S. subsidies are not the culprit for Mexican farmers’ displacement. Rather, it is some other aspect of the agreement.