The Effect of North American Free Trade Agreement (NAFTA): Ten Years Later

Abstract

This paper examines the economic impact of the North American Free Trade Agreement (NAFTA) on international trade among the three member countries – Canada, Mexico and the United States, in the past ten years. Through regression techniques, estimated volume and the predicted trend for exports among the countries are compared with the actual observations. The empirical results indicate that NAFTA did achieve the desired goal of increasing trade among their member countries. The actual trade volume is greater than what the estimated trade volume would have been without NAFTA. Although all the member countries have seen their exports increased, the volumes vary among the three, with Mexico being the largest beneficiary.