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Economic studies on trade liberalization typically highlight positive expected effects. This paper discusses those issues which are frequently neglected, but are nevertheless important for policy-makers. These are macroeconomic adjustment costs and social costs of regulatory change. Our discussion uses the most relevant studies on the economic effects of the Transatlantic Trade and Investment Partnership (TTIP) as reference points. We provide a rough estimate of macroeconomic adjustment costs of TTIP in the order of €33–60 billion over a 10-year transition period. Our analysis of regulatory change concludes that assessments have been biased and that the social costs of regulatory change due to TTIP might be substantial. Given the prominence of regulatory issues on the trade agenda, we call for full ex-ante regulatory impact assessment of future trade agreements.

The file attached to this record is the author's final peer reviewed version. The Publisher's final version can be found by following the DOI link. Post-Keynesians have delivered an important advance in providing explanations of the Eurozone Crisis, not the least in demonstrating how the formation of the European integration project lacked the means to manage effectively the macroeconomic imbalances between ‘core’ and ‘peripheral’ spaces across the region. Through a critical engagement with such descriptions, this article argues that to account more adequately for the formation of the asymmetrical and crisis-ridden forms of development across the Eurozone, it is necessary to focus on the uneven and combined development of Europe’s ‘peripheral’ spaces and their integration into an expanded free trade regime since the 1980s. It is through a focus on the structuring condition of uneven and combined development shaped by capitalist social relations of production and attendant class struggles that we can better locate the origins of the present crisis.

In the middle of two crises, the first one in 1982 and a second one in 1986, Mexico initiated a new economic strategy, inaugurated with two important reforms: trade liberalization, and financial liberalization and deregulation. With the first reform the economic authorities wanted to reposition Mexico in the international division of labor. With the second one they aimed at attracting capital inflows and modernizing the banking sector. Resolute commitment to drastic trade and to financial liberalization brought praise from a large part of the press and from international organizations, especially during the years from the mid-1980s to the mid-1990s when these two reforms were fully implemented. They were therefore greatly surprised when at the end of 1994 Mexico went into a deep crisis. The objective of this work is to study this period, to argue that the results of those reforms did not deserve to be praised, and to explain why the crisis could have been anticipated. Mexico’s experience is import...

Between 1993 and 2013, the US trade deficit with Mexico and Canada increased from $17.0 to $177.2 billion, displacing 851 700 US jobs. All of the net jobs displaced were due to growing trade deficits with Mexico. The number of US jobs displaced by trade deficits with Canada declined slightly between 1993 and 2013. Prominent economists and US government officials predicted that the North American Free Trade Agreement (NAFTA) would lead to growing trade surpluses with Mexico and that hundreds of thousands of jobs would be gained. The evidence shows that the predicted surpluses in the wake of NAFTA's enactment in 1994 did not materialize. Growing trade deficits and job displacement, especially between the United States and Mexico, were the result of a surge in outsourcing of production by US and other foreign investors. The rise in outsourcing was fueled, in turn, by a surge in foreign direct investment into Mexico, which increased by more than 150 percent in the post-NAFTA period.

This article reviews the Keynesian/heterodox critique of free trade and the principle of comparative advantage, and offers some prima facie empirical evidence for North America that contradicts the basic predictions of the traditional free trade model. The evidence supports, instead, the view that trade liberalization actually promoted a perverse neo-mercantilist export-led growth (ELG) strategy that generates deflationary pressures not so much because NAFTA promoted greater international competition, but primarily because ELG relied on the macroeconomic role of the state in its implementing of restrictive fiscal and monetary policies to keep a lid on wage growth. The article argues that there is need for an alternative NAFTA that should promote the free circulation of goods, and that an institutional structure should be put in place that firmly ties each national government to an explicit full-employment commitment.

The point that baffles me even more than the failures of Keynesian economic policies is the even greater failure of Keynesian economists’ common sense.Just how can highly reputed economists with their long pedigrees get everything so wrong?The evidence for Keynesian economic prescriptions in times of crisis harkens back to an old adage: “Whenever people make decisions when they are either panicked or drunk, the consequences are rarely attractive.†If you are as convinced as I am of the healing powers of free markets, then the ideal public policies should be: a) a low rate, broad-based flat tax; b) spending restraint; c) sound money; d) free trade; and e) minimal regulations.And, at no time are these healing powers of free markets more important than during periods of crisis.In times of crisis the motto should be “Don’t just stand there, undo something!†History and free markets have our back.

There is a longstanding tradition of analyzing trade and growth in economics, going back to the discipline's founders. But for Latin America, the debate on the significance of this relationship has had much more than academic relevance. It has been one of the central components of the different approaches to development that have shaped the region's economic history, the other (closely related) component being the roles of the State and of the market in economic development. In Latin America, the dominant understanding of the relationship between trade and growth has evolved radically over time. Starting from the position that foreign trade should be managed with the objective of promoting industrialization and domestic development, around the mid 1980s it changed to an opposing view based on the notion that free trade and privatization are the fundamental guarantors of sustainable economic growth. In the last ten years, however, the consensus view has shifted again, to a more critical, skeptical view of the benefits of trade as an automatic and dynamic engine of economic growth.More precisely, analysis of the trade-growth relationship in Latin America since World War II has passed through various stages. The first, which lasted until the early 1960s, was associated with the dominance of the Structuralist school of economic thought. It was marked by a rejection of free trade policies, an emphasis on primary commodity exports and inward, state-led industrialization. In the second stage, which lasted from 1960 to the mid-70's, the policies associated with 'structuralism' were called into question. But many professional economists remained committed to state led industrialization while also recognizing the role of manufacturing exports in promoting growth.