Before NAFTA was established, investing in Mexico was a difficult process. Investors needed the Mexican Government's approval and were also required to meet specific investment guidelines. These requirements necessitated investors to export a set level of goods and services, utilize domestic goods and services, and transfer technology to competitors. Under NAFTA, investors no longer need government approval to invest and are treated as domestic investors. NAFTA has also increased intellectual property rights and allowed companies to obtain patents in Mexico and Canada. In the past, companies were hesitant to export research and development intensive goods; with increased intellectual property protection, however, exports of these goods has shown a definite increase.

As a result of better trading condition

A rise in trade combined with increasing levels of employment and consumption allows for potential growth in the level of GDP. According to Fortune magazine, the average GDP of those countries belonging to the EFTA rose an average of 2.1% each year (Fortune 7). As trade, employment, and consumption increase together, GDP has a tendency to do so as well. EFTA countries approaching a level of full employment due to changes in trade, tariffs, and consumption will eventually experience its beneficial effect on the economy.

Free trade under NAFTA has also encouraged international specialization, the production of only the goods that a particular economy can produce most efficiently. If the U.S. for example, is efficiently manufacturing cars and Mexico, producing corn, then the U.S. should produce only cars and Mexico, only corn. They are more efficient if they each produce at their highest output, and trade for other goods. International specialization increases efficiency, lowering consumer prices; consumers no longer have to pay for inefficiently produced goods. The benefits of NAFTA are therefore, increased employment, raised national income, and lower consumer prices.

Since its initial founding, the number of member-countries in the EFTA has dwindled from seven to only four. The EFTA is clearly not the most prominent free trade organization in Europe; it is apparent that the European Union holds the position of dominance, as many EFTA countries have defected to the EU over the years. The EFTA's minority power in Europe and the simple reality of its size may cause many countries to brush it aside. While it has united with the European to Union to accomplish many things such as the European Economic Area, it might be more effective if it could handle more significant matters on its own.

s, exports and imports of most other goods have increased along with the research and development intensive goods. In Mexico, the elimination of investment barriers has allowed investment to expand. Increased trading and investment has then created many jobs, raised the Gross Domestic Product, and lowered consumer prices. The macroeconomic principles defined in Economics 103 relate to NAFTA's impact on aggregate supply and demand, employment, investment, and their effects on national income.

Consumption can be affected not only by a rise in the employment level, but also by the reduction in tariffs provided by the EFTA. When consumers have to pay less for their goods, their level of real wealth has the effect of increasing. Lower prices enable them to buy more goods with the same level of income; there is the illusion of greater income. This feeling of increased wealth, along with a rise in the actual level of employment, contributes to increased consumption. The increasing degree of consumption will, again, lead to greater national income, and to a higher level of real GDP.

The free trade established by MERCOSUR also involves countries within South America. MERCOSUR, the Southern Common Market ( Mercado Common del Sur) was established in 1991 after a series of other free trade treaties failed to meet the standards of the countries involved. It is set up on the basis of free trade zones and eventually to lead to a common market. Before MERCOSUR there was ALALC, the Latin American Free Trade Association. It was formed in 1960 and set up free trade zones through the periodic negotiations between the members of the association. ALALC ended in the 1970's due to these negotiations because they were left to the discretion of the countries involved and unfair practices started to occur. After ALAC, came ALADI, the Latin American Integration Association. Founded in 1980, it established economic preference zones instead of free trade. This encouraged economic growth and increased actions and agreements between countries that previously had no connections. In 1986 Argentina and Brazil signed a Treaty for Integration,

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Approximate Word count = 3923
Approximate Pages = 16 (250 words per page double spaced)