Chapter_8_International_Trade_Agreements

Taking the difference between trade created and

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Taking the difference between trade created and diverted, we get: 80% x 54% - 20% ξ 40% = 35% 0 Share of US imports Increase in US imports Share of other imports Decrease in other imports Since this number is positive, trade creation is greater than trade diversion. Canada gained.
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The North American Free Trade Agreement Gains and Adjustment Costs for Canada under NAFTA In Canada, there were very large initial declines in employment. Over time, however, these job losses were more than made up for by the creation of new jobs elsewhere in manufacturing. Productivity growth in Canada allowed for a modest rise in real earnings.
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Gains and Adjustment Costs for Mexico under NAFTA Mexico is waiting for its trucks to be allowed to cross the border for long-haul trips into the United States. NAFTA resulted in a decrease in tariffs. How did the fall in tariffs affect the Mexican economy? NAFTA increased the productivity of the maquiladora plants over and above the increase in productivity that occurred in the rest of Mexico. Real monthly income also grew faster in the maquiladora plants because of increased trade with the United States. The North American Free Trade Agreement
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Gains and Adjustment Costs for Mexico under NAFTA Productivity, Real Wages and Incomes in Mexico FIGURE 6-8 Labor Productivity and Wages in Mexico Panel (a) shows labor productivity for workers in the maquiladora Mexican manufacturing plants and for workers in non- maquiladora plants in the rest of Mexico. Panel (b) shows wages and monthly income for workers in maquiladora and non-maquiladora plants. Productivity and real monthly income grew faster in the maquiladora plants because of increased trade with the United States. The North American Free Trade Agreement
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Gains and Adjustment Costs for Mexico under NAFTA Adjustment Costs in Mexico Farmers growing corn in Mexico did not suffer as much as was feared. The poorest farmers can always consume the corn they grow, rather than sell it. The Mexican government also applied subsidies to offset the reduction in income for corn farmers. The total production of corn in Mexico actually rose after NAFTA. The maquiladoras face increasing international competition (not all due to NAFTA), which can be expected to raise the volatility of its output and employment. The North American Free Trade Agreement
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Gains and Adjustment Costs for the United States under NAFTA The North American Free Trade Agreement Studies of NAFTA on the U.S. economy have not estimated its effects on the productivity of U.S. firms. Among the reasons is that Mexico and Canada are only two of many trading partners with the U.S. Researchers have explored a second source of gains from trade: the expansion of import varieties available to consumers.
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