Question

4. What is one argument for and one argument against NAFTA?

Answer 1

For Nafta:

Nafta allows the US to produce goods and service in which they have a comparative advantage i.e. the capital goods. With Nafta in place, the firms are mainly doing the capital investment and work like research and development. Building capital goods etc. it allows the abundant factor to gain more return. For example, it is more productive for the US firms to work on a new design of the car and getting them built by the Mexican.

Against the NAFTA:

Nafta has taken away the manufacturing jobs form the US to other areas which have cheaper wages like Mexico. It has caused massive job losses in the US. and affected the middle-class income the most.