Activity

Activity objective

To analyze the effects of the free trade agreements in Mexico.

Instructions

  1. Mexico has always portrayed itself as one of the most pro-trade countries in the world. For instance, we have a free trade agreement with the United States and Canada, and another one with the European Union. We are active members of the WTO, the OECD, the APEC, the Pacific Alliance, and have also signed multiple bilateral agreements with many nations, most of them deemed as “strategic”. Answer the next two questions in your own words:
    1. What are the costs and potential benefits of adopting a free trade strategy?
    2. What can it be done to reduce those costs and maximize the benefits?
  2. Drawing upon the new trade theory and Porter's competitive advantage theory, outline the Mexican case for one of these industries: (1) oil and petrochemicals, (2) agriculture and foods, (3) mining, (4) manufacturing, (5) automotive, (6) entertainment and sports. Choose only one out of the six, and answer:
    1. What kind of trade and economic policies would you recommend that the federal government adopt to apply Porter's theory in that specific industry?
    2. Do your policies support the basic free trade philosophy? Why, or why not?
  3. Read Objective 5.3 of Mexico’s current Plan Nacional de Desarrollo (Attached).
    1. How does the Mexican government frame the issue of international trade according to the theories you reviewed? Write a quick analysis covering all these elements, if applicable: Mexico’s best economic interest; absolute or comparative advantages; specialization in production of goods; efficiency and supply chains; unrestricted and unregulated trade; national gains from trade and economic growth; Mexico’s factor endowments and domestic demand; economies of scale; the role of firms and private companies; and what is next in the foreseeable future.
  4. Case. The governor of the Mexican state you currently reside on, wants to know what this Trans-Pacific Partnership is all about, and the reason as to why it is relevant to the state’s economy. Then, let’s suppose that the governor just hired you to answer that question, very concisely, in a one-page document that covers these three sections:
    1. What is the TPP, and why is it important for Mexico to partake in it?
    2. To what extent is the TPP relevant to that specific state’s economy?
    3. Which local industries and big firms within the state should be concerned with the economic impact of the TPP?
  5. Frame your analysis in terms of local comparative advantage, the specialized production of goods across the state, and some examples of local economies of scale, if applicable.

Checklist