NAFTA's Threat to Central American and Caribbean Basin Exports: A Revealed Comparative Advantage Approach
The recent passage of the North American Free Trade Agreement (NAFTA) between Canada, Mexico and the United States (US) marks an important step in the movement towards greater regionalism of trade among the countries in the Americas. From the perspective of the United States, the potential benefits to be gained from the anticipated increase in trade, economies of scale in production, increased access to the resources of production, and lower prices for the US market (due to the increased competition for consumer goods) combine to make its involvement in NAFTA desirable despite whatever limitations are posed, in the short and medium term, by Mexican underdevelopment (SerraPuche, 1992;US-ITC, 1991a).