Purchase Solution

Wage Difference Between Mexico and the United States

Not what you're looking for?

Ask Custom Question

Ross Perot added his memorable "insight" to the debate over the North American Free Trade Agreement (NAFTA) when he warned that passage of NAFTA would create a "giant sucking sound" as U. S. employers shipped jobs to Mexico, where wages are lower than wages in the United States. As it turned out, many U. S. firms chose not to produce in Mexico despite the much lower wages there. Explain why it may not be economically efficient to move production to foreign countries, even ones with substantially lower wages.

Purchase this Solution

Solution Summary

Ross Perot famously claimed that the North American Free Trade Agreement (NAFTA) would create a "giant sucking sound" as U. S. employers shipped jobs to Mexico. This solution uses economic analysis to explain why Perot's "sucking sound" did not in fact occur.

Solution Preview

Ross Perot didn't consider the difference in productivity between American and Mexican workers. The US has a much larger supply of capital than Mexico, meaning that American workers are more highly trained and have better ...

Purchase this Solution

Free BrainMass Quizzes
Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.