Was NAFTA necessary?

Was NAFTA necessary?

by Noel Maurer, Harvard Business School. Division of Research

Part of Working paper / Division of Research, Harvard Business School -- 06-043

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Mexico signed NAFTA in 1994. NAFTA's primary importance was not in providing market access to the United States. Rather, its primary importance was in providing investor protections to foreign direct investment. NAFTA succeeded in its instrumental goal of increasing foreign direct investment. Increased FDI, however, was limited mostly to manufacturing and has had relatively little impact on the bulk of the economy. Without reforms in the finance and energy sectors, and greater security of property rights for domestic investors, Mexico will be doomed to continuing subpar economic performance.

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