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NAFTA: Lessons from an Uneven Integration

The North American Free Trade Agreement (NAFTA) was the first free trade agreement between the United States, Canada, and a developing country, and it was the most ambitious anywhere in the world among countries with such extreme differences in income and development but with a geographical proximity that allows integration to take place beyond the trade factor. It could be argued that, more than a trade agreement, NAFTA is a pathway to regional integration. It could provide, therefore, an opportunity to understand the relationship between efficiency impacts on sector output and employment, the growth rates of national income and productivity, and the distribution of income within and among countries. Ten years after its enactment, the whole region has undergone a transformation: new and larger linkages have emerged in goods and services production, there has been reallocation of productive capacities, and labor markets have become more integrated. No other region in the world has witnessed such a transformation; indeed, one of the largest migration processes in world history has taken place between Mexico and the United States. Debates over the process have been many, but the productive effects of migration have not yet been analyzed. In this article, the discussion is centered on the emergence of interactions among the three countries, how they have changed routines and the whole eco-