277218192-r1-1.doc - Name 1 Name Professor Subject Date Abstract The paper purpose is to evaluate the impact of NAFTA on the beef trade between the

277218192-r1-1.doc - Name 1 Name Professor Subject Date...

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Name 1 Name Professor Subject Date Abstract The paper purpose is to evaluate the impact of NAFTA on the beef trade between the United States and Mexico. For this purpose, both beef import and export data were collected from the authentic sources. This collection period includes 20 year data in which ten years’ data before the NAFTA and ten years’ data after the NAFTA have been used. Additionally, four variables have been used: two independent and two dependent variables. The independent variables include beef imports and beef exports whereas the rate of unemployment and the GDP growth of the United States have been used as dependent variables. The beef import from Mexico has been regressed against the rate of unemployment in the United States. On the contrary, the beef export to Mexico has been regressed against the GDP growth rate of the United States. The subsequent results reveal that the beef import from Mexico retains a positive relationship (i.e. adjusted R-squared value of 16), indicating any beef import from Mexico increases the rate of unemployment in the United States. On the other hand, beef export to Mexico also retains a positive relationship with the GDP growth rate (10 percent adjusted R- squared value). And, the subsequent application of Heckscher-Ohlin Model authenticates that the cost of beef production is relatively cheaper in Mexico than in the United States as cost of labor and beef farming are comparatively affordable in Mexico than in the United States.
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Name 2 Introduction If someone asks, which country has the biggest economy in the world, we can say that it is the United States. Even though the Unites States has experienced economic downturn issues such as the Great Depression, it finally became a country which has one of the biggest economies in the world by overcoming economic recession. Nowadays, people often refer to the United States got economic superpower. Brisk trade between the United States and other countries supports it. International trade is one of the most important activities in economy. Mexico is one of the top trade partners of the United States. Mexico is very close to the United States, geographically and culturally. The USA is the country that consumes the most beef and also produces the most beef in the world. As everyone knows, the United States and Mexico are connected by land, so transportation between two countries is simple. Therefore, they can trade fresh meat and the trade between the United States and Mexico was actively carried out. For better trade, the three countries of the United States, Canada and Mexico entered into a North American Free Trade Agreement to create a free trade zone, which became effective on January 1, 1994 (New York Times). This agreement would have changed the beef trade between the United States and Mexico. Since the United States consumes the world’s largest beef, the free trade agreement would have made a big difference in quantities of import and export of beef and price as well. I predict that the US imports more beef rather than before NAFTA. Therefore, in
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  • Spring '14
  • AlannaK.Fleming

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