Abstract
The authors analysed comparative advantage of Canada, Mexico and the United States in the context of the North American Free Trade Agreement (NAFTA). The authors found that there is empirical evidence as expected that the United States of America has a large number of products in which it has a comparative advantage in, followed by Canada. Mexico is the least competitive with fewer products compared to the United States of America and Canada. The authors have also concluded that having comparative advantage is not synonymous with trade performance in intra-regional trade as Mexico tends to benefit much more in spite of having a very few products in which it has comparative advantage as demonstrated by huge trade surpluses over Canada and the United States.
Highlights
There are many regional groupings around the world
The authors have concluded that having comparative advantage is not synonymous with trade performance in intra-regional trade as Mexico tends to benefit much more in spite of having a very few products in which it has comparative advantage as demonstrated by huge trade surpluses over Canada and the United States
The international participation in Free Trade Zones has significantly grown especially in the second half of the 20th century (Global Economics, 2012). This has resulted in many regional economic groupings which include: European Union (EU), Caribbean Common Market (CARICOM), Central American Common Market (CACM), Latin America Integration Association (LAIA), Association of South East Asia Nations (ASEAN), Mercosur, Southern Africa Customs Union (SACU), Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC), Economic Community of Central African States (ECCAS), Economic Community of West African States (ECOWAS), Arab Maghreb Union (AMU), Community of Sahel –Saharan States (CEN-SAD), Inter-governmental Authority for Development Community (IGAD) and Southern African Development Community (SADC) (Claiming Human Rights, 2012; FAO, 2012)
Summary
There are many regional groupings around the world. free trade has not been attained globally, regional trading blocs seem to provide a mechanism of free trade. The international participation in Free Trade Zones has significantly grown especially in the second half of the 20th century (Global Economics, 2012). This has resulted in many regional economic groupings which include: European Union (EU), Caribbean Common Market (CARICOM), Central American Common Market (CACM), Latin America Integration Association (LAIA), Association of South East Asia Nations (ASEAN), Mercosur, Southern Africa Customs Union (SACU), Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC), Economic Community of Central African States (ECCAS), Economic Community of West African States (ECOWAS), Arab Maghreb Union (AMU), Community of Sahel –Saharan States (CEN-SAD), Inter-governmental Authority for Development Community (IGAD) and Southern African Development Community (SADC) (Claiming Human Rights, 2012; FAO, 2012). According to Shinyekwa and Othieno (2011) some products do not obviously maintain www.ccsenet.org/jsd
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