NAFTA has been a net positive for the Texas economy

Vince Ginn at the Texas Public Policy Foundation has done a study of the impact of NAFTA on the Texas economy.  Contrary to the impressions of some politicians, the results have been beneficial.  Ginn along with Travis roach conducted the study in 2015.
“International trade has been one of the greatest harbingers of prosperity worldwide,” says Ginn. “Though usually discussed at the national level, individual states also benefit. My recent peer-reviewed publication co-authored with Dr. Travis Roach finds that the Texas economy was more resilient to oil price fluctuations and economic volatility nationwide after the 1994 North American Free Trade Agreement (NAFTA). Lower trade costs led to industrial diversification to meet the desires of Mexico and Canada contributing to Texas now leading the U.S. in exports for the last 13 consecutive years supporting millions of jobs in small to large firms.

“While there are potential costs associated with joining a regional free trade agreement, our results suggest that the benefits of NAFTA outweigh those costs in Texas, helping the state better cope with external shocks. Our research helps explain why Texas’ economy has weathered the substantial drop in oil prices relatively well since July 2014.
Here are some of the nuggets from the article:
Despite these mixed risk signals when a country joins a RFTA, data from the Federal Reserve Bank of Dallas (n.d.) indicates NAFTA may have contributed positively to Texas’ economy. For example, real exports from Texas increased by 286% from 1994 to 2011, and Texas led all states in exports for twelve consecutive years through 2013. The Census Bureau (n.d.) reports that the share of U.S. exports from Texas
was 17.7% in 2013, which is larger than the state’s roughly 10% share of the nation’s total economic output....
Indeed, according to the San Antonio Express-News, Texas largest trading partner is Mexico.  In 2014 it was reported:
Texas led the nation in exports last year, selling a record-breaking $279.5 billion worth of goods abroad, U.S. Trade Representative Michael Froman said Monday in San Antonio.

That marked a 183 percent increase over the Lone Star State's export sales in 2003. It also beat Texas' previous export record of $264.7 billion in 2012.

Last year, companies in the San Antonio-New Braunfels metropolitan area exported $19.3 billion in merchandise.

“More than 1 million Texas jobs are supported by trade,” Froman said. “Our job is to open more markets to exporters. Ninety-five percent of the world's consumers live outside the United States.”

Texas' largest trade partner was Mexico. The state's manufacturers posted $100.9 billion in merchandise sales in Mexico in 2013, representing 36.1 percent of the state's total merchandise exports.

Mexico was followed by Canada at $26.1 billion, Brazil at $10.9 billion, China at $10.8 billion and the Netherlands at $9.5 billion.

The state's largest manufacturing export category was petroleum and coal products, which accounted for $60.6 billion of Texas' total goods exports in 2013. Oil refiners have been helped by cheaper crude oil flowing in from the Eagle Ford Shale and the Permian Basin.
Other top manufacturing exports were electronic products at $48.2 billion, chemicals at $47.9 billion, machinery at $30 billion and transportation equipment at $24.4 billion.
There is much more.

What seems clear is that Texas has managed to handle its affairs better than states who are complaining about the free trade agreements.  It also seems clear that the proposals of Donald Trump on trade would have a negative effect on the Texas economy and on millions of jobs in the state.


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