Economic Integration

The United States and Mexico have undergone an accelerated process of economic integration over the past two decades. Trade has tripled between 1990 and 2008, influenced by the North American Free Trade Agreement (NAFTA). Mexico is now the United States’ third largest trading partner and the second destination of exports, accounting for roughly one-eighth of all U.S. exports. Twenty-two American states depend on Mexico as their first or second destination for exports. The United States also depends on Mexico for more than one-tenth of its petroleum imports. Increasingly, US and Mexican companies are pursuing joint production processes, where manufactured goods are produced on both sides of the border. <br>In recent years, several Mexican companies have also become major investors in the United States and are now the industry leader in bakery goods, dairy products, cement, and tortillas. Even the labor markets of the two countries have become increasingly intertwined, with immigrant workers from Mexico accounting for a significant part of U.S. labor market growth in the United States and contributing to the solvency of U.S. entitlement programs.

Despite these trends, not enough attention has been given to deepening economic integration beyond trade and investment. NAFTA did not attempt to stimulate the type of economic development needed to promote job creation and a more equitable income distribution. The Mexico Institute addresses the complexities that arise from North American economic integration as Mexico hopes to promote sustained economic growth and equitable development in a post-NAFTA era, and follows debates on energy, trade, and economic and social policy.

 

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