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NAFTA at Ten:
World Bank Study Found to be Flawed Wrong Data Leads to Erroneous Conclusion
A new study from the Center for Economic
& Policy Research (CEPR), "NAFTA at Ten: The Recount" by
Mark Weisbrot, David Rosnick, and Dean Baker, finds serious flaws in the
World Bank's study of NAFTA, released in December 2003 on the 10th
anniversary of the trade agreement, therefore calling into question the
Bank's conclusion that NAFTA increased GDP growth in Mexico.
The World Bank recently released a study, marking the tenth anniversary of
the NAFTA agreement, that focused on the agreement's impact on Mexico's
development. This study included a widely cited section that tested the
effect that NAFTA had on Mexico's per capita GDP growth. The test used in
the study found that NAFTA increased Mexico's per capita GDP by an extra
4-5 percentage points by the end of 2002.
This paper examines the basis for this result. It shows that the per
capita GDP data used for the World Bank's test is widely out of line with
per capita GDP data from all authoritative sources, including the Penn
World Tables, the OECD, and the International Monetary Fund's World
Economic Outlook. The per capita GDP ratios used in the World Bank study
imply that the United States had a per capita GDP of nearly $21,000 in
2000. This is approximately one-third below the level estimated by these
other sources, which place the United States' per capita GDP in 2000 at no
less than $31,000.
When data from these other sources is used in the same regression that
appears in the World Bank study, the result is reversed. In nearly every
specification, the regression results indicate that NAFTA slowed the rate
of growth in Mexico.
While this test cannot be viewed as conclusive, it is worth noting that
when generally accepted data are used in the World Bank's test, the
results show that NAFTA reduced growth in Mexico -- the opposite of the
results obtained by the World Bank study.
The full paper is available at:
http://www.cepr.net/publications/NAFTA_at_Ten.htm Or in PDF format at: http://www.cepr.net/publications/NAFTA_at_Ten.pdf
The Center for Economic and Policy Research is an independent, nonpartisan
think tank that was established to promote democratic debate on the most
important economic and social issues that affect people's lives.