19 Pages Posted: 22 Nov 2012
Date Written: April 13, 2012
The signing of the Central American Free Trade Agreement (CAFTA) and its subsequent implementation in 2006 by El Salvador, Guatemala, Honduras, Nicaragua, and the United States, with Costa Rica and the Dominican Republic entering the agreement in 2009, renaming it the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA), continued trade liberalization trends in Latin America. Economists, scholars, and politicians alike view NAFTA and DR-CAFTA as a movement towards an even more ambitious Free Trade Agreement of the Americas (FTAA) and economic integration of the region from Canada to the southern cone. The present study does not discuss NAFTA or FTAA in detail, but rather elucidates the impact DR-CAFTA has had on member nations since their respective entrance. The study does so by first examining historical, economic, and political context and forces in Latin America. Second, DR-CAFTA its stipulations and arguments for and against the agreement are discussed. Next, regression analyses shed light on the impact of DR-CAFTA on trade and GDP growth in participating countries. Finally, future consequences of DR-CAFTA are elaborated.
Keywords: Free Trade, DR-CAFTA
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