Trade played a significant role as a factor of economic growth in the establishment and development of the economy. In terms of emerging economy the meaning of foreign nation’s welfare increases. Such economy evolves under the influence of globalization, which implies a special role of foreign trade. This is due to the fact that the traditional comparative advantages, such as the difference in the allocation of countries of production factors, monopoly on natural resources and geographical conditions, and those associated with innovation processes, new technologies, with the choice of the consumer, its level income. At the same time we should bear in mind that the existing school and the concept of economic growth do not pay enough attention to the process of globalization and innovation as factors of economic growth in transitive economy.
Theoretical studies having purely empirical character of foreign bilateral trade as a key development for economic growth involved thinkers from a vast bulk of directions of economic theory. Their trend presents the teachings of the mercantilists, classical direction, the neoclassical school, as well as leftist criticism in relation to the "third world" countries. Even in the period of New Times the representatives of mercantilism like T. Myung, Montchretien A., A. Serre, G. Scaruffi thought that foreign trade was the only way to accumulate monetary wealth of the nation. They identified wealth with the money, and it was associated with an increasing in protectionist trade policies.
The most prominent thinkers of English political economy such as Adam Smith, David Ricardo and John Mill found a positive effect of changes in the country's wealth by foreign trade. In accordance with them foreign trade leads to an increase in national wealth due to the international division of labor through the growth of consumption. Adam Smith’s concept of the absolute advantages was later supplemented by David Ricardo’s concept of comparative advantages (Hinojosa-Ojeda, 34).
But to make our study relevant we need to modern approaches. It is worth to illustrate the approach of the theory of income distribution from foreign trade (W. Globerman, R.E. Scott and G. Hufbauer.), there is no consensus regarding the impact of foreign trade on economic growth. W. Globerman argued that in the process of foreign trade in goods, global prices are rising, increasing the income of factors of production which are used intensively in the creating of these goods, which causes economic growth (Globerman, 205). G. Hufbauer asserted that foreign trade via export expansion, used in the production of relative surplus production factor, is likely to lead the other industries reduction for which this factor is not relatively excessive to that slow down economic growth (Hufbauer, 109). R.E. Scott pointed out that the factors of development of foreign trade specific in the export sector in each country, will develop and thus stimulate the general consumption (Scott, 78).
The representatives of the neoclassical direction R. Hinojosa-Ojeda and L.Teslik argued that the factor of foreign trade theory has revealed new aspects of the impact of foreign trade on economic growth. They showed that the foreign trade may develop in increased consumption of the owners of relatively abundant factor of production and exports, which causes economic growth. Hinojosa-Ojeda pointed out that the removal of all restrictions in foreign trade will lead over time to maximize the national income of the economy involved in foreign trade (Hinojosa-Ojeda, 99).
Factors specific to the trade sector, competing with imports shall decline. Accordingly, it will change the income of owners of production factors in export industries, these revenues will increase in industries competing with imports which could both accelerate economic growth, and slow it down.
Critical of the traditional theory of foreign trade for developing countries theoretical views, were presented in the left-wing radical direction of economic science, namely the work of Immanuel Wallerstein. The essence of their argument was to ensure that foreign trade is a special way to redistribute income from the periphery to the center of the world economy, on the one hand, speeds up economic growth in developed countries, and on the other - it slows developing.
Mexico and USA at the modern stage of development of their trade relations
Once the provisions of agreement between Mexico and the USA came into force in 1994, Mexico cut the customs duties of about 50% of industrial products imported from the United States, and liberalized some non-tariff barriers. By 2003 practically all tariffs on industrial goods, were abolished and on 1 January 2008 last restrictive measures on a number of agricultural products that come from the US to Mexico. The economy of Mexico ranks 13th in the world in terms of GDP, is the third-largest US trading partner and the second market for American ex-port. Much of this success was ensured creation of a free trade zone NAFTA (Sommer, 67)
One of the main positive effects of the reform of the national economy, coupled with partnership with the USA, was the privatization of the state property, deregulation, reduction of public support for some inefficient sectors of Mexican economy, including rural households. Among other positive outcomes of free trade effect on Mexico's economy include many other trends. The increase of trade flows. The bilateral trade between Mexico and the United States has grown more than fourfold since the signing of the Agreement. Mexican exports of goods to the US increased from 39.9 $ billion in 1993 to $ 210.8 billion in 2007. That is, net increase in 437%. In 2007, the United States exported goods to Mexico in the amount oа $ 136.5 billion. It is 242% increase compared to 1993. During this period, the US GDP increased by 50%, while Mexico's GDP increased only by 46%.
The United States is the largest investor for Mexico. In addition, US companies, have a share about 50% of SRI investment funds investing in Mexican companies that collect the final finished product of the US-com extension kit for the return of their exports to the United States in the framework of free economical zones of industrial type. These firms account for almost half of Mexico's exports and more than 41 billion dollars. Annual sales volume in the Mexican economy helped to increase the effectiveness of Mexican manufacturing. Many manufacturing companies have managed to reduce the cost of production due to the transfer assembly of its products to enterprise poppies. This contributed to a significant increase in production in the Grain Pipeline US industry, which grew by almost 60% in 1993-2006. For comparison, over the same 13 years before signing the release of US industrial production increased only by 42%. The following table based on the data from Mexican trade Ministry comprising 2013-2014 etfrs will help us to imagine the general trend.
After signing the Agreement, the position of the Mexican labor market has been less stable than in the US one. But, since 2005, the Mexican subsidiaries of US companies hired at approximately 840 000 people, accounting for 3.3% of Mexico's GDP. The salaries of Mexican workers are steadily growing, since the national currency peso crisis in 1994 (reaching the pre-crisis level in 1997) and permanently increasing each year. In addition, the export-oriented industries located in regions with high levels of foreign investment, wages substantially higher. According to the Secretariat of the Ministry of Economy of Mexico, export-oriented companies in the wage level is higher by 37% than in the companies operating in the domestic market.
The energy sector of Mexico is the 6th in the world by value of crude oil pro-driver and 2nd oil supplier to the United States. Nevertheless, in spite of high energy prices, the state oil company Pemex is in a difficult financial position and the volume of its production is constantly decreasing. Without significant domestic and foreign inflows, the company cannot provide the oil production, located in the deep-water Gulf of Mexico oil fields (Teslik, 234)
But it is not enough to restructure Pemex. Traditional fear that foreign control over natural resources lead to a loss of national sovereignty. But Pemex needs more independence from the state in order to better uses of attracted investments. Although this goal may not be a politically difficult (because of the desire of the Mexican government to maintain control over the oil industry), but economically it may be necessary for preservation of the state-owned monopoly of the company.
Another important issue is the liberalization of the transport industry. The Agreement provides for the free intersection ne-border US and Mexican truckers. In fact, US policy requires that Mexican freight forwarders transporting goods destined for the United States to unload the goods at the warehouses in an external non-trade-zone 25 miles from the border, in order to further its transport local car companies to the final destination.
The liberalization of cross-border traffic has been delayed, reportedly due to security expressions, but rather for political reasons, as 80% of the US top fixing with Mexico by road. But Ur-regulation, this situation is of paramount importance. Currently, the delay in the opening of the US market for Mexican carriers is to Americans about $ 200-400 million per year due to higher transportation tariffs. And that's not all the problems facing Mexico on trade liberalization (Globerman, 95).
Thus, the trade with the USA had a huge impact on the trade balance and economy of Mexico. From 2000 to 2008, its trade with the United States has more than doubled. At the time of signing the document the Mexican trade deficit with the US was approaching $5 billion, but a year later he turned into a surplus of $ 12 billion. But subsequently after the world economic crisis these figures demonstrate less pace of increase (Dunker, 211).
Politicians, especially during the recession, blame the US and NAFTA in the negative consequences connected with problems in Mexican economy due to the decline of bilateral trade. Of course, closer economic integration with the US economy in the industrial sector is fraught with negative consequences in the event of a recession, at the beginning of this decade and now. But no alternatives are proposed. Although the current crisis is brought from the outside, it puts Mexico face to face with the inner realities: the old economy, not adapted to the Agreement with the USA, which is not able to support the country's development.
But now to bet on protectionism means to encourage poverty. On the other hand, the concept underlying the NAFTA gives Mexico the ability to transform and modernize the economy. To some extent the crisis creates a chance to do away with all the prejudices of the past, from which the Mexicans have not got rid till now (Globerman, 120).
Mexicans are more accustomed to the logic and spirit of this agreement, but the government and Congress are paralyzed, representing the heaviest burden for the economic development of the country. Failure to take advantage of the opportunities offered by NAFTA, has caused discontent of certain groups of the population, and this skill is used by various politicians and political parties. More than century-old Mexican-American relations today develop qualitatively new association on the basis of economic union NAFTA. As we shall consider, the economy and politics are closely related things. So the relationship the United States and Mexico are built around the problems of illegal migration and drug trafficking.
In my subjective opinion, in the US and Mexican trade relations under NAFTA there is still untapped potential. No matter how much the American skeptics have tried to protect his country from the integration process - they are inevitable. Ultimately, the international community knows that the favorite American cuisine - Mexican, and the most commonly studied foreign language - Spanish. You may want to use these aspects of the benefit, rather than trying to eradicate completely natural process.
Works cited
St. Globerman, M. Walker Assessing NAFTA: a trinational analysis / eds.Vancouver, Mankato, Minn.: Arcturus Pub., 2008. Print.
Dunker J. Regionale Integration im System des liberalisierten Welthandels: EG und NAFTA im Vergleich / J. Dunker. – Frankfurt am Main, 2002.
Hinojosa-Ojeda R. North American Integration. Three Years After NAFTA Wilmington, Del.: SR Books, 1988. Print..
Hufbauer G.C. NAFTA Revisited: Achievements and Challenges.-2005.
Scott R.E., Salas C., Campbell B. Revisiting NAFTA: Still not working for North America’s workers.-2006.-Economic Policy Institute
Sommer Е. The Economic Benefits of NAFTA to the United States and Mexico National Center for Policy Analysis (NCPA). - Mankato, Minn.: Arcturus Pub., 2008. Print.
Teslik L.H. NAFTA’s economic impact.-2009.- Council on foreign relations Wilmington, Del.: SR Books, 1988. Print.
