Visiting economics professor speaks on effects of NAFTA

By Michael McVey

We all have heard from Ross Perot, President Bill Clinton and Rush Limbaugh how North American Free Trade Agreement will affect the entire country.

Peter Karl Kresl, economics professor at Brecknell University in Lewisburg, Pa., lectured Monday night and Tuesday afternoon on the effects of regional and global trade liberalization on cities. Kresl said he believes the local economy is more important than the national economy from the standpoint of job opportunities.

“Ross Perot’s ‘sucking sound’ analysis was done in a dark room with many whiskies and a dart board, where he picked a number and used it for his analysis on NAFTA,” Kresl said. Some cities will fare better than others, but the overall national job situation should not change much, he added.

To assess the effects of free trade on urban areas, Kresl studied the economies of several cities along the U.S.-Canadian border. Kresl said the effects of free trade on cities vary on the basis of location, local government and infrastructure.

Some cities are located near and can form partnerships with large economic centers across a national border. Kresl said Buffalo and Toronto are good examples of this kind of partnership.

Other cities like Chicago and Calgary must compete for trade with large international markets. “Cities must focus on competitiveness and on strategies to enhance their competitiveness,” Kresl said.

Chicago and Buffalo are classic examples of the differences between cities that try to promote exports and cities that try to serve as bridges to foreign markets, Kresl said. This would cause Chicago to increase manufacturing while Buffalo tries to improve its transportation network.

Cities are a much more important factor in today’s global market than they were in the past. Local government has an increasingly important responsibility to maintain a favorable economic environment, Kresl said. While Pittsburgh benefits from the management of its entire urban area by the Allegheny County government, for example, the lack of cooperation between Cook County and the collar counties hurts Chicago, he added.

Cities also can team up with other cities which face many of the same situations in other countries, Kresl said. For example, a city in Europe struggling to rebuild its manufacturing base for exports could team up with Chicago. This may be of more benefit than having a sister-city in Japan with a completely different economic situation.

The overall effect of NAFTA on a particular urban area will depend primarily on how the government and industries of a city respond to the changing market, Kresl said.

If a city tries to compete and makes itself attractive to the international markets, jobs and wealth will move into the city, as will skilled labor. One important way to do this is to promote culture and fine arts, Kresl said. Also important is providing the kind of infrastructure that will attract skilled labor, Kresl said.

“One thing that’s obvious is NAFTA will affect different cities in different ways, depending, among other things, upon location near or away from the border,” said Anthony Scaperlanda, professor of economics. He said national government should provide transportation and information networks, but needs to be flexible enough that local governments can design an economic policy suitable to their situation and goals.

Scaperlanda said excessive regulation could impair urban progress if regulations are not flexible enough to account for the economic variation between cities.

Steve Karlson, associate professor of economics, questioned Kresl’s logic. “As I perceive it, it sounds like he’s put together a Hillary Clinton task force to design strategy for a city. If you do ‘X’, they (jobs) will come,” Karlson said. The problem, Karlson added, is that “X” is a bundle of contradictions.

Karlson said he believes national government policy will have a considerable effect on the economic situations of cities.