2014/10/01 by Robert E. Scott · 1 citation
Economics, Econometrics and Finance · Social Sciences · #Balance of trade #Business #Economic Zones and Regional Development #Economics #Foreign direct investment #Free trade #Free trade agreement #Global trade and economics #International Relations in Latin America #International economics #International free trade agreement #International trade #Investment (military) #Outsourcing #Political science #Trade creation #Trade diversion
paper · doi:10.4337/roke.2014.04.02
published in Review of Keynesian Economics 2(4), 429-441 (Edward Elgar Publishing)
openalex publication_date 2014/10/01 · openalex created_date 2025/10/10 · openalex updated_date 2025/11/06
Between 1993 and 2013, the US trade deficit with Mexico and Canada increased from 17.0 to 177.2 billion, displacing 851 700 US jobs. All of the net jobs displaced were due to growing trade deficits with Mexico. The number of US jobs displaced by trade deficits with Canada declined slightly between 1993 and 2013. Prominent economists and US government officials predicted that the North American Free Trade Agreement (NAFTA) would lead to growing trade surpluses with Mexico and that hundreds of thousands of jobs would be gained. The evidence shows that the predicted surpluses in the wake of NAFTA's enactment in 1994 did not materialize. Growing trade deficits and job displacement, especially between the United States and Mexico, were the result of a surge in outsourcing of production by US and other foreign investors. The rise in outsourcing was fueled, in turn, by a surge in foreign direct investment into Mexico, which increased by more than 150 percent in the post-NAFTA period.