After reading the article written by Emmanuel Alvarado, please answer the next questions:
1) How did NAFTA treaty is related to poverty and inequality in recent times in Mexico?
2) Do you think the neoliberalism has helped to improve life standards in Mexico?
NAFTA did a lot of good for Mexico but it also brought along some downsides that lead to inequality and poverty in Mexico. NAFTA benefits were not distributed evenly. Corporations have benefited but the working class is suffering declining living standards. The Agricultural sector experienced higher rate of unemployment after NAFTA since it increased competition from USA but also due to agricultural reforms. Initial conditions in Mexico also determined. The trade liberalization may also have indirectly lead to bigger income disparities within Mexico.
ResponderEliminarLike said before NAFTA and neoliberalism did a lot of good for Mexico. I think in some level it has improved the living standards in Mexico but not significantly. There are still huge gaps between economic classes. The poverty level and GDP growth have stayed quite stable apart from a couple of peaks. The peaks have been up and down though. The latest peak has been down a lot. The poverty level, however, has slowly within this century started to decrease which is good and hopefully will stay decreasing. Mexico's is also more in debt now than it was before.
Riia Reijola
I completely agree with you. :)
EliminarThe NAFTA treaty has neither been the cause of nor the solution to the mitigation of poverty and inequality in Mexico. The NAFTA treaty increased wage inequalities between the more educated part of the population and the less skilled part of the population. This is because many labor-intensive industries belonged to Mexico's most protected industries where the less skilled part of the population worked, but after the accession to the NAFTA treaty in 1994 which led to a free trade market, these industries were challenged by international companies with lower prices. Because of this the Mexican industries did not have the resources to employ more people or raise the employees wages. Mexico's accession to the NAFTA treaty has also affected the equality in the country in a negative way. The economic possibilities and the economic growth that the NAFTA treaty contributed with have only affected some specific areas and some parts of the population in a positive way. The advantages of the NAFTA treaty have only been beneficial to the educated part of the population who live in certain regions of the country, e.g. Mexico City and the northern regions. Poor people and those who are hurt by the free trade do not benefit from these economic advantages, as well as poorer regions such as Chiapas and Oaxaca. This is because the government tend to spend more money on the urban areas, which makes it even harder for the poor people to get an education. The illegal immigration to the U.S. is also a problem that is tied to Mexico's accession to the NAFTA treaty. This problem has had negative consequences in poor rural regions from where the immigrants come from. This is because the families who receive money from family members who work in the U.S. are able to increase the overall local demand for services and products, which leads unfair circumstances and inequality. There have also been advantages in Mexico's accession to the NAFTA treaty. The trade and investment that were introduced by NAFTA have expanded and the new competition between national and international companies has led to developments in technology.
ResponderEliminarI think that neoliberalism has increased life standards at least for a part of the population. It is good that it has been possible for some regions to develop and for some people's life standards to improve, but at the same time it is negative that it also has increased the inequality in society and between regions. Some people¡s life standard has improved because of better education, more job opportunities, development in technology etc.
I completely agree with you. :)
EliminarQ1-Agriculture: small plots of land ownership prevent economies of scale and lands are sometimes under-irrigated, government subsidy leads to lack of competitiveness of products, unfavorable rural infrastructure cannot facilitate the distribution of products, government speed up the opening of market to satisfy the growing demand of com for the livestock and starch industries as well as to control inflation. After NAFTA treaty, the above-mentioned four points combined with the fact that US agriculture products flow into the market, making rural farmers (the poor people in Mexico) even poorer.
ResponderEliminarFDI and trade: As rural people immigrate to cities to seek a better life, foreign direct investment and trade do not create enough jobs to assist the rural poor, some immigrants are unemployed. Insufficient job creation combined with demographic growth of the labor make the situation even worse. The flows of foreign direct investment have been overwhelmingly directed towards the wealthier regions of Mexico because the wealthier Mexican urban regions possess the necessary transportation and communication infrastructure as well as the labor pool.
Immigration: family members of migrant workers who received funds from them were able to increase overall local demand for products and services. However, the families with no migrant workers tend to be poorer.
Education: After NAFTA, returns to higher education increases however it is difficult for poor people to access higher education.
All these facts make the poor people (farmers, low-skilled workers in rural area and southern of Mexico) even worse than before NAFTA and make people with high education and good skills and residents in northern cities richer, thus widening the income disparity.
Q2-On one hand, FDI and trade create more jobs in cities, employed workers in the cities and their family members who can receive their earnings from cities can improve their living standard. On the other hand, people in rural areas and cities with poor infrastructures cannot benefit from the neo-liberalism and even are hurt by the opening of agriculture market. Moreover, as Mexican economy is more related to the US economy, it is easily affected by the crisis in the US economy or in the international market, thus making Mexico’s economy more vulnerable. When crisis attacks Mexico, it is likely that the living standards of Mexican people to be lower.
I completely agree with you. :)
Eliminar