Fundamentals of International Business Essay Example | Topics and Well Written Essays - 500 words

Fundamentals of International Business - Essay Example After more than 10 years in operation, NAFTA certainly has resulted in major changes in the trade and overall economic system, but the overall impact, whether positive or negative, needs to be evaluated in a perspective that is broader than the immediate repercussions. NAFTA was created to ease trade restrictions and tariffs among its three member nations. However, a number of economists and politicians think that the trade agreement resulted in an economic downturn in the United States. In a report for the Economic Policy Institute (EPI), for instance, Scott (2003) stated that there have been false promises on the part of NAFTA with regards to improvements in the economy. This is because the agreement caused an imbalance in the trade system, resulting in job losses, company closures and a shift of investments to Mexico, which offered lower capital outlays and better profitability. Most of the jobs lost were in the manufacturing sector, as more factories were transferred to Mexico for cost-efficiency purposes. The EPI evaluation showed that the number of jobs lost, predominantly in the motor vehicle, textile and apparel, and computer and electrical appliance industries, greatly outnumber the jobs created as a result of NAFTA (Scott, 2003). While Mexico benefited much from the NAFTA deal, other exporters such as those in the Caribbean region suffered, as it became more difficult for them to compete with Mexican