"Aftathoughts on NAFTA," 15 minute edited version

The cut-down fifteen-minute edited version of my "Aftathoughts on NAFTA" talk:

http://delong.typepad.com/video/NAFTA/NAFTA_15_minutes.m4v

Comments

[Mona Lyne]

Brad,
You are shamelessly playing to the crowd here. None of the 4 factors you mention for why things don't look better in Mexico are related to NAFTA itself. Surely NAFTA cannot be blamed for Mexico's high birth rate nor for the failure to invest more heavily in basic social overhead and human capital. Moreover, certainly you would not argue that Mexico would be better off if it had not adopted NAFTA. Without NAFTA Mexico would have fallen even further behind in terms of making the adjustments necessary to integrating with the international economy, and the ultimate and inevitable adjustment would be even more painful.

[Bupa]

Not very impressive Brad.

I agree with Mona Lynn, you are shamelessly playing to the crowd here.

Check your stats. According to the World Bank Mexico's population growth has been around 1 percent, not 2.5 percent (http://web.worldbank.org/WBSITE/EXTERNAL/DATASTATISTICS/0,,contentMDK:20899413~menuPK:232599~pagePK:64133150~piPK:64133175~theSitePK:239419,00.html). Thus GDP per capita has been growing at a respectable clip by non-East Asian standards.

Of course, Stiglitz, Sachs, and others argue that GDPpc is not the best measure of prosperity.

The China excuse is not well articulated. If Mexico's exports to GDP have grown rapidly but prosperity has not, is that because of faulty links between export growth and prosperity, or are you proposing that export growth needed to be even higher than it was to have a link to prosperity but China crowded out faster export growth?

The "Washington Consensus" mea culpa boils down to free trade being a "necessary but not sufficient" argument.

Your third reason is the crux of the matter but is glibly cast asside without sufficient analysis. This "social democratic agenda" is actually a key component of the investment climate and part and parcel of a broader reform strategy that the US as a good neighbor under your tenure might have pursued with more vigor if you weren't resting on your oversimplified assumption that free trade would cure all ills.

See my earlier post on the example of good neighborliness by the EU towards Central Europe over the same decade as an example of how big neighbors can support a broader reform agenda where free trade is but one part.

Regarding your last point, expectations are rarely met even when growth is rapid. Even in Central Europe government's tend to change in every 4 year election cycle because public expectations are out of line with the public's perception of changes on the ground.