The Risks of Market-Based Regionalism: The Politics of Economic Divergence in North America.

This paper compares the earlier predictions concerning NAFTA's impact on Mexico with the actual results a decade later. The analysis suggests that none of the forecasters fully captured the essence of what came to pass: the serious underperformance of the Mexican economy in the NAFTA era. Particularly at odds with earlier projections is the partial and uneven pattern of "convergence" between Mexico and its NAFTA partners. While Mexico shows some signs of convergence in terms of macroeconomic performance, its story at the microeconomic level reads like a textbook example of divergence from its more developed NAFTA partners. The paper seeks a broad political explanation for this divergence, one that probes the interests, ideologies and choice of policies that have underpinned the process of North American integration, from both a regional and a domestic standpoint. The paper then reviews the convergence/divergence debate with regard to Mexico, and analyzes the empirical data that have been used to tout both the benefits and the costs of asymmetrical integration. The paper then critiques the potential role of NAFTA as a development tool, and argues that the steep asymmetries call for a more proactive domestic strategy on Mexico's part, one that directly tackles the sources of slow growth and rising inequality. ..PAT.-Conference Proceeding [ABSTRACT FROM AUTHOR]