International Business

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The response addresses the queries posted in 2128 words with references.

//Before writing about the economic changes that have taken place in Mexico from 1993-2003, we will write about the importance of economic development. Then, we will discuss about the economic development stages of Mexico. It will be helpful in analyzing the economic changes in Mexico from 1993-2003.//

International Business

Answer 1

Economic Development is the development of economic wealth of countries for the well-being of their population. Economic development is an effort to improve the economic well-being and the quality of life of the nation by creating or retaining incomes. The countries pass through various stages of economic development.

Economic Development stages of Mexico

On the basis of purchasing power parity and the GDP, Mexico is the 12th largest economy in the world. The history of economic development in Mexico ways back from the early 1917, when the government, for the overall development of the country and its population, provided in its constitution the principles of national ownership of subsoil rights, expropriation of property needed for national purposes and the breaking up of large estates. It also expropriated the property of the foreign oil companies in 1938 (Buscaglia, 1994).

Even the production, refining and distribution were brought under the government control. The banking, railways and the power plants were taken by the government under its control. Till the year 1984, majority of the sectors required to have the Mexican ownership. After that, the legislations for foreign investment were relaxed. The government also undertook many developmental projects in the fields of modernization of railroads, increasing the agriculture productivity and expansion of the fishing fleet (Buscaglia, 1994). When Mexico joined GATT in 1986, it eliminated trade barriers and tariffs were also reduced. Privatization was adopted by 1989 and generated large onetime revenues for the government.

During 1993 to 1999 more than 3.1 million firms export contributed less than 5% and more than 300 exporting firms and 3,500 maquiladoras have produced 95% contribution in GDP of Mexico. Joining The North American Free Trade Agreement (NAFTA) in the year 1994, there has been tremendous growth in the Mexico. It had opened up foreign investment possibilities in mostly all Mexican sectors like services sectors, banking, investment, intellectual property rights, labor & environmental, etc. In 1994-95, Mexico faced financial crisis. In the form of emergency funds, Mexico, received help from U.S government, World Bank, IMF and the Inter-American Development Bank. The Mexican economy began to recover in 1996. In 2001-02, the Mexican economy had weakened due to weak domestic demand. The government aimed at a reduction of the fiscal deficit and public debt by 2006.

//Above, we discussed about the economic development stages of Mexico. Now, we will discuss about the impact of NAFTA on the development of Mexican economy. It will assist in understanding the role of NAFTA in helping Mexico for the economic development.//

Impact of NAFTA on Mexican the development of Mexican Economy

NAFTA is considered as the extension of the earlier Free Trade Agreement between Canada and the U.S. In 1988. Under international law, it forms the part of a treaty where as in the United States law, it is considered as an agreement of congressional-executive (Bergstrand 1989). The North American Free Trade Agreement (NAFTA) was launched by Canada, the United States and Mexico in January 1994. It forms the world's main free trade area. In all three countries, this Agreement has successfully brought rising standards and economic growth for the people. In addition to this, NAFTA is recognized as a well-built ...