The Effects of the North American Free Trade Agreement and the Devaluation of the Peso on the Mexican Economy
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Authors
Pool, Cara
Issue Date
1995
Type
Thesis
Language
en_US
Keywords
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Abstract
On December 17, 1992 the North American Free Trade
Agreement was signed by U.S. President Bush, Mexican President
Salinas, and Canadian Prime Minister Mulroney. This pact, joining its
three members in trading relations, created the world's largest free
trade zone. Markets were opened, trade barriers were torn down,
and finally, on January 1st of 1994, the trade agreement was
officially implemented.
Just weeks prior to the implementation of NAFTA, the new
Mexican President Zedillo began his presidency with a 15%
devaluation of the peso. This devaluation quickly developed into a
situation of economic devastation, as the world watched the value of
the peso plummet from 3.5 pesos per dollar to 7.5 pesos per dollar in
a mere two months.
These two monumental events sent shock waves throughout
the nation, and left Mexico struggling frantically to escape a severe
recession. This Senior Individualized Project provides an analysis of
these events which have had such a tremendous impact on the
Mexican economy.
The effects of NAFT A and the devaluation of the peso are
illustrated in this paper through specific case studies. Predictions
drawn from economic theory are compared to actual financial data
from several Mexican companies. Discrepancies between the
predictions and the actual figures are explained and the results
discussed. The discussion is geared, not only towards understanding
the underlying economic principles, but also learning how to apply
those principles to real life situations.
Description
iii, 40 p.
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License
U.S. copyright laws protect this material. Commercial use or distribution of this material is not permitted without prior written permission of the copyright holder.