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Are American companies gaining or losing from NAFTA?

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yaga49 | Valedictorian

Posted June 6, 2013 at 12:40 PM via web

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Are American companies gaining or losing from NAFTA?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted June 6, 2013 at 12:54 PM (Answer #1)

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It is extremely hard to know if NAFTA in particular has had much of an impact on American companies.  It is also important to differentiate between the impact that NAFTA might have had on companies and the impact that it might have had on individuals.

First, it is clear that not all American businesses have been harmed by NAFTA.  One measure of the value of American companies is the Dow Jones Industrial Average.  This measures the stock prices of some of the biggest American companies.  This stock index is much higher today than it was before NAFTA was passed.  Of course, there are many factors that influence this and so we cannot credit it to NAFTA, but at the same time it is hard to argue that NAFTA has seriously harmed these firms.

Second, it is clear that some industries and some people have been harmed by trends that have occurred since NAFTA.  There have been companies that have moved production to Mexico.  These are generally jobs that were held by less-skilled workers.   However, it is not clear that killing NAFTA would have helped these people.  There are plenty of jobs that have gone to China without it being part of NAFTA.

Finally, it is really hard to know how NAFTA has affected American businesses since it is not the only influence at work.  Many, many things have happened since 1994 that may have affected the US economy.  Overall, though, studies have typically tended to argue that NAFTA has not had a huge impact one way or the other. 

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