A Proposed North American Regional Development Fund: The Next Phase of North American Integration Under NAFTA

Abstract

The North American Free Trade Agreement has been misconceived, from its inception, as an economic agreement, but NAFTA's geopolitical and social importance go far beyond the economic sphere. This article contends that the NAFTA parties should address the social repercussions of economic integration in North America, and should consider adopting joint policies to assist disadvantaged persons and poorer regions within North America. The article contrasts the experience of NAFTA with that of the European Union, with its broad policies of social cohesion that are directed at leveling the differences in economic development between regions. The central thesis of the article is that the public infrastructure for a competitive, prosperous economy is lacking in Mexico, and that such an infrastructure is not likely to be established in the near future without assistance from Mexico's NAFTA partners, which are the most logical source of assistance. The unauthorized migration of Mexican workers to the United States, a prime safety valve for the Mexican poor, is one result of NAFTA's shortcoming in this regard. After a brief survey of development assistance to Mexico, the article suggests an alternative to the present approach: the creation of a North American Regional Development Fund to counteract weaknesses in physical and institutional infrastructure in Mexico.

Keywords: NAFTA, North American Integration, Economic Development, Trade and Development