GDP per capita growth 1980 Index = 100 180 160 140 120 100 After NAFTA United States Canada Mexico 80 80 82 84 86 Source: International Monetary Fund. 88 90 92 94 96 98 00 02 04 06
Job growth: U.S. vs. Canada Percent change, year ago 6 4 2 After NAFTA Canada 0 United States -2-4 81 83 85 87 Source: International Monetary Fund. 89 91 93 95 97 99 01 03 05 07
Unemployment: U.S. vs. Canada Percent of total labor force 12 10 8 After NAFTA Canada 6 4 United States 2 81 83 85 87 Source: International Monetary Fund. 89 91 93 95 97 99 01 03 05 07
U.S. trade shares of GDP As percent of GDP 5 After NAFTA 4 3 Trade with Canada 2 1 Trade with Mexico 0 85 87 89 91 93 95 Sources: International Monetary Fund, U.S. Census Bureau. 97 99 01 03 05 07
Trade balance: U.S. and Canada US$ billions 400 300 After NAFTA Imports 200 Exports 100 0 Trade balance -100 85 87 Source: U.S. Census Bureau. 89 91 93 95 97 99 01 03 05 07
Trade balance: U.S. and Mexico US$ billions 250 200 150 100 50 0 After NAFTA Imports Exports Trade balance -50-100 85 87 Source: U.S. Census Bureau. 89 91 93 95 97 99 01 03 05 07
U.S. trade growth with Canada Annual rate, 1996 2007 Rank Commodity Exports (percent) Commodity Imports (percent) 1 Gas, natural and manufactured 29.1 Medicinal and pharmaceutical products 24.5 2 Electric current 27.3 Petroleum & petroleum products 15.8 3 Coin, including gold coin 18.7 Misc. edible products and preparations 15.2 4 Petroleum & petroleum products 15.1 Gas, natural and manufactured 14.6 5 Beverages 12.6 Vegetables and fruit 12.9 6 Iron and steel 11.8 Electric current 10.5 7 8 9 10 Fixed vegetable fats and oils, crude, refined or fractionated Medicinal and pharmaceutical products Misc. edible products and preparations Source: U.S. Census Bureau. 11.6 Organic chemicals 10.3 10.2 Fertilizers 10.0 10.1 Sugars, sugar preparations and honey Essential oils and resinoids and perfume materials 9.9 Dairy products and birds' eggs 0.1 Total 5.9 Total 6.5 10.0
U.S. trade growth with Mexico Annual rate, 1996 2007 Rank Commodity Exports (percent) Commodity Imports (percent) 1 Coin, including gold coin 22.5 Dairy products and birds' eggs 27.8 2 Transport equipment 21.0 Meat and meat preparations 25.4 3 Dairy products and birds' eggs 18.8 Metalworking machinery 19.2 4 Beverages 17.2 Gas, natural and manufactured 18.4 5 Petroleum and petroleum products 15.6 Transport equipment 16.9 6 Misc. edible products and Misc. edible products and 14.6 preparations preparations 16.5 7 Crude animal and vegetable 13.5 Beverages 16.1 8 Nonferrous metals 13.5 Petroleum & petroleum products 15.8 9 Organic chemicals 13.5 Specialized machinery 14.9 10 Sugars, sugar preparations and honey 12.8 Nonferrous metals 14.7 Total 8.3 Total 10.1 Source: U.S. Census Bureau.
U.S. exports to Canada By commodity, 2007 Miscellaneous manufactured articles, 10.5% Chemicals and related products, n.e.s., 10.3% Food and live animals, 5.8% Machinery and transport equipment, 48.5% All other, 11.3% Source: U.S. Census Bureau. Manufactured goods classified chiefly by material, 13.6%
U.S. imports from Canada By commodity, 2007 Chemicals and related products, n.e.s., 7.8% Miscellaneous manufactured articles, 5.1% Machinery and transport equipment, 31.8% All other, 14.9% Manufactured goods classified chiefly by material, 15.3% Source: U.S. Census Bureau. Mineral fuels, lubricants and related materials, 25.1%
U.S. exports to Mexico By commodity, 2007 Chemicals and related products, 12.5% Miscellaneous manufactured articles, 9.2% Food and live animals, 6.8% Machinery and transport equipment, 44.1% All other, 12.8% Source: U.S. Census Bureau. Manufactured goods classified chiefly by material, 14.6%
U.S. imports from Mexico By commodity, 2007 All other, 7.6% Manufactured goods classified chiefly by material, 7.6% Food and live animals, 4.0% Machinery and transport equipment, 54.1% Miscellaneous manufactured articles, 10.5% Source: U.S. Census Bureau. Mineral fuels, lubricants and related materials, 16.2%
U.S. trade with Canada Cork and wood US$ billions 8 Imports 6 4 2 Exports 0 96 97 98 Source: U.S. Census Bureau. 99 00 01 02 03 04 05 06 07
U.S. trade with Mexico Sugars, sugar preparations and honey US$ billions 0.8 Imports 0.6 0.4 0.2 Exports 0.0 96 97 Source: U.S. Census Bureau. 98 99 00 01 02 03 04 05 06 07
U.S. trade with Mexico Transportation equipment US$ billions 0.8 Imports 0.6 0.4 0.2 Exports 0.0 96 97 Source: U.S. Census Bureau. 98 99 00 01 02 03 04 05 06 07
U.S. trade with Canada Medicinal and pharmaceutical products US$ billions 5 Imports 4 3 2 Exports 1 0 96 97 98 Source: U.S. Census Bureau. 99 00 01 02 03 04 05 06 07
Private employment growth Annual growth rate, 1994 2006 Source: Bureau of Economic Analysis. Most growth Second tier Third tier Least growth
Manufacturing job growth Annual growth rate, 1994 2006 Source: Bureau of Economic Analysis. Most growth Second tier Third tier Least growth
Illegal immigrant population 2000 2006 Percent change State of residence (millions) 2000 to 2006 California 2.5 2.8 12.7 Texas 1.1 1.6 50.5 Illinois 0.8 1.0 22.5 Florida 0.4 0.6 25.0 New York 0.5 0.5 0.0 Arizona 0.3 0.5 51.5 Georgia 0.2 0.5 122.7 New Jersey 0.4 0.4 22.9 North Carolina 0.3 0.4 42.3 Washington 0.2 0.3 64.7 Other states 1.8 3.0 68.6 Alll states 8.5 11.6 36.5 Source: U.S. Department of Homeland Security.
Origin of illegal immigrants Europe and Canada, 6% Africa and other, 3% Asia, 13% Mexico, 56% Other Latin America, 22% Sources: CNN, Pew Hispanic Center.
Illegal immigrants by occupation 25% 24% 20% 15% 17% 14% 12% 10% 5% 0% Sources: CNN, Pew Hispanic Center. Farming Cleaning Construction Food prep. Production Percent 9% Transport 7%
Myth 1: The Trade Balance Mercantilism: exports are good, imports are bad; trade deficits are terrible. In 2007 the United States trade deficit with its NAFTA partners was $140 billion. So NAFTA must be terrible. Everything about this syllogism is wrong. Exports are good and imports are good. Trade agreements don t change trade balances. Trade deficits are not bad per se. Arithmetic to gladden a mercantilist s heart: NAFTA share of the US total trade deficit is only 17 percent ($140 billion out of $855 billion). However NAFTA share of US two-way trade with the world is much larger, 29 percent ($914 billion out of $3,153 billion). Finally, 68 percent of the NAFTA deficit ($95 billion) is attributable to energy imports from Canada and Mexico. Do presidential candidates want to turn out the lights?
Myth 2: Job Losses Senator Obama (02/24/2008): One million jobs have been lost because of NAFTA. The Senator s assertion reflects the most extreme estimate of US job losses due to NAFTA, 94,000 a year for a decade. A realistic estimate is 50,000 jobs lost a year and US exports to NAFTA partners support 70,000 new jobs a year. Annually the dynamic US economy displaces approximately 17.5 million jobs and creates about 18.3 million new jobs. NAFTA accounts for a small fraction (under one percent) of annual job churn. Since NAFTA was signed, the US unemployment rate fell from 6.1 to 4.6 percent (1994 to 2007). Where is the sucking sound coming from?
Myth 3: Depressed Wages The ratio of US white collar to blue collar compensation stopped its steep rise in 1991, before NAFTA. Between 1991 and 2005, the employment cost index rose 63% for white collar and 58 % for blue collar. Technological change explains roughly half of the US skill premium, while trade and immigration together account for around 10 percent. Texas Ohio Average weekly earnings for manufacturing workers in the 5 states that trade most with Mexico rose more rapidly than the national average between 1997 and 2006: California Arizona Michigan Illinois Average of the 5 states (weighted by manufacturing GDP) Pennsylvania National average 49 48 45 20 28 41 24 27 26
Myth 4: Illegal Immigration The flow of illegal immigrants from Mexico increased from an annual average of 270,000 in the 1990s to an annual average of 315,000 in the 2000s. The stock grew from 2.5 million persons in 1995 to 6.6 million in 2006. Cause: NAFTA! Wrong! Underlying causes : Persistent huge earnings differentials between Mexico and the United States. In 2006, the hourly compensation for manufacturing workers was $29.60 in the United States and $3.70 in Mexico. A strong US economy versus a mediocre Mexican economy. Between 1995 and 2007, US real GDP grew 3.1 percent per year, very good for an advanced country. During the same period, Mexican real GDP grew 3.7 percent per year, mediocre for a middle-income country. Through improvements in infrastructure and education, the Mexican growth rate could reach 6 percent, drawing hundreds of thousands of new workers into new jobs annually. Facts: NAFTA says nothing about border control; NAFTA visas are available only to skilled professionals. The immigration myth is classic post hoc ergo propter hoc.
Population by poverty definition and ratio of Mexican exports to GDP Nutritional poverty 21.2% Human capital poverty 30.0% 13.8% 20.7% 1994 2006 1994 2006 Patrimonial poverty 52.4% Exports to GDP ratio 31.9% 42.6% 16.8% 1994 2006 1994 2006 Fuente: INEGI y CONEVAL
Mexico s GDP Per Capita GDP per capita almost tripled between 1980 and 2007 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Note: Gross Domestic Product (GDP) per capita, current prices Source: IMF, World Economic Outlook Database, October 2007