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What is the purpose of NAFTA?

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nhl123 | Student, Grade 11 | Valedictorian

Posted May 3, 2012 at 2:41 AM via web

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What is the purpose of NAFTA?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted May 3, 2012 at 2:45 AM (Answer #1)

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The purpose of the North American Free Trade Agreement (NAFTA) was to cause economic development in all three countries that are covered by the agreement.  Those countries are the United States, Mexico, and Canada.

Most economists believe that free trade is good for the economies of all countries involved.  It allows countries to focus on making things that they have a comparative advantage in making.  When countries do that and trade for the things they do not make (economists say), the overall levels of production for the world as a whole (or in this case for the region as a whole) increase.

The point of this agreement, then, was to increase production in the economies of all three countries.

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