What were gains and adjustment costs for Canada when entering NAFTA?
- Cost of 100.000 jobs / 5% of manufacturing employment
- Some industries had employment fall by ca. 12% due to tariff cuts
- Over time, more new jobs elsewhere in manufacturing
- No long run job losses
—> These findings support the monopolistic competition model
What were gains and adjustment costs for Mexico when entering NAFTA?
Tariffs on U.S. goods fell to 1% and visa verca
Productivity increased, esp. for Maquiladora plants
agricultural sector didn’t suffer because:
Poorest farmer are self-catering
Mex. Government was able to use subsidies to offset the reduction in income for other corn farmers
Total production of corn rose
Employment in Maquiladora plants grew rapidly, fall after 2000 due to recession in US and competition with China
Last changed2 years ago