We have benefitted from comments from numerous seminar participants at the NBER International Finance and Macro 2001 winter meeting, the IMF, the Federal Reserve Board, the BIS, the Reserve Bank of Australia and several universities. We are grateful to Geert Bekaert, Hali Edison and Gabriel Galati for providing data, and to Advin Pagtakhan for research assistance. The views expressed are solely those of the authors, and do not necessarily represent those of the institutions the authors are associated with. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.
Tins is it working paper and the author would weluune any eominents on the present le\t. Citations should reter to jn unpublished manuseript. mentionint; (he author and ¡he dale ol issuanee hy [he Inlernalional Monetary I : imd The views evpressed are those ot the author and do nut ni-iessunly represen! those ot the I-'und.
This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.This paper provides a comprehensive assessment of the impact of NAFTA on growth and business cycles in Mexico. The effect of the agreement in spurring a dramatic increase in trade and financial flows between Mexico and its NAFTA partners, and its impact on Mexican economic growth and business cycle dynamics, are documented with reference both to stylized facts and recent empirical research. The paper concludes by drawing lessons from Mexico's NAFTA experience for policymakers in developing countries. The foremost of these is that in an increasingly globalized trading system, bilateral and regional free trade arrangements should be used to accelerate, rather than postpone, needed structural reform.
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