By Frank Bonilla
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Extra resources for Borderless borders: U.S. Latinos, Latin Americans, and the paradox of interdependence
One assumption is that liberal economic policies and increased trade will stimulate economic growth throughout the hemisphere. Neoclassical theory predicts that lower tariffs should lead to greater internationalization. Yet, historically, the decline in tariffs and increase in trade have been accompanied instead by a rise in quantitative restrictions on imports. 21 Rather than broadly diffused international trade, we have seen a rise of regional trading blocs since the 1980s. In fact, it was the desire to protect regional markets that led to adoption of the North American Free Trade Agreement (NAFTA).
While some of the factors in this disequalization are specific to these regions and the current time period, we should first stress that such a result is not as novel as mainstream social scientists might think. The standard models of growth and trade are sometimes too limited in their assumptions and reasoning. 5 Moreover, the notion that internationalization will improve the domestic distribution of income in poorer countries by raising demand for abundant labor is based on a simple two-factor model of the economy in which capital and labor compete as inputs, and any shift toward a labor-intensive comparative advantage will favor the latter.
Policy interventions aimed at shifting the process of economic growth from unbalance to one of broadly shared wealth and well-being offer a starting point for reversing this situation. Policy Choices in an Interdependent World Latinos and Latin Americans have several policy options. First, they can attempt to influence regional trade agreements like NAFTA, the Caribbean Basin Initiative, and their counterparts in Central America (Caricom) and South America (MERCOSUR). The goal is to ensure that microeconomic policies associated with regional integration will facilitate the intended economic transitions with a minimum of domestic disruption.
Borderless borders: U.S. Latinos, Latin Americans, and the paradox of interdependence by Frank Bonilla