William Easterly, Norbert Fiess, and Daniel Lederman
Economía, Volume 4, 1-53.
NAFTA and Convergence in North America: High Expectations, Big Events, Little Time
The North American Free Trade Agreement (NAFTA) was formally implemented on 1 January 1994 by the United States, Canada, and Mexico. This treaty instantly gained global notoriety following the initiation of formal negotiations in 1991, not only because the initiative represented one of the most comprehensive trade agreements in history, but also because it seemed to be a breakthrough in establishing free trade in goods and services among developed and developing countries. The high expectations were that trade liberalization would help Mexico catch up with its northern neighbors. The ratio of Mexican GDP per capita to that of the United States did increase after unilateral trade reforms were implemented in 1986 and also after the implementation of NAFTA in the aftermath of the so-called tequila crisis. However, other Latin American economies also grew faster than the U.S. economy after the mid-1980s, especially Chile and, to a lesser extent, Costa Rica. Thus it is not obvious that NAFTA was particularly important in helping Mexico catch up with the United States.