NAFTA key to economic, social growth in Mexico

CHIHUAHUA CITY, Mexico — The North American Free Trade Agreement, which went into effect in 1994, has been the key driver of Mexico’s economic and social transformation of the past 20 years, analysts say.

NAFTA at first brought an explosion of low-skill-labor factories to the Mexican side of the U.S. border. By the mid-2000s, the trade pact had triggered an increasingly sophisticated manufacturing base that now reaches across Mexico’s 31 states.

“What we’re seeing now is a growth of industry in Mexico that requires more engineers,” said Christopher Wilson, an associate with the Mexico Institute at the Washington-based Woodrow Wilson International Center for Scholars.

“To put a name on it, specifically, we’re talking about automobiles and aerospace,” Mr. Wilson said. “Mexico is now graduating more engineers than Germany every year.”

A 40 percent jump in Mexico’s per capita gross domestic product since the inception of NAFTA has brought with it an increasingly robust middle class.

“What that means is Mexicans are becoming more educated, and there is more investment in children, which is why you are able to see the development of an aerospace sector,” Mr. Wilson said.

Poverty rate nearly halved

About 47 percent of Mexico’s 115 million people live in poverty, down dramatically from the 80 percent rate half a century ago. Today, 98 percent of homes have electricity, and more than 4 million people study at the university level each year.

Through early 2012, the nation of 112 million had an unemployment rate of roughly 5 percent.

The per capita salary of about $15,000 ranks the country 81 out of 195 nations.

North of the border, however, NAFTA’s reputation remains a topic of heated debate. From the onset, when 1992 U.S. presidential candidate Ross Perot, an independent, described the “giant sucking sound” that would be heard if the agreement were implemented, critics have long decried the flight of U.S. manufacturing jobs to Mexico.

U.S. unemployment is running above 8 percent.

Some NAFTA critics point to less publicized impacts wrought by the trade agreement.

“During the first few yeas, there was a massive overhaul of Mexico’s agricultural trade rules through NAFTA,” said Todd Tucker, who heads Global Trade Watch at the Washington-based nonprofit advocacy organization Public Citizen.

“This meant small-scale Mexican farmers were massively displaced by subsidized imports from companies in the United States,” Mr. Tucker said. “That led to overcrowding in cities, as well as new immigration into the United States.”

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