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Darla Moore School of Business


Moore School international business professor examines drug trade, illegal immigration in Mexico

February 23, 2018

As part of ongoing research into how regional and global market growth affects economic and sociopolitical development, Moore School International Business Professor Gerald McDermott recently published his book, "Leveling the Playing Field: Transnational Regulatory Integration and Development."

"It's really about the harmonization of regulatory systems," he says of the opening idea that the creation of global markets is not about trade liberalization — the removal or reduction of restrictions or barriers on the free exchange of goods between nations. "This is an important change in perspective."

After more than 25 years of research on this and related topics, McDermott says that rules and regulations can act as either enablers or barriers to growth. As a result, there has been a huge debate between countries over the last couple decades about who should set the standards.

"What happens if you impose rules that no one can comply with?" McDermott asks. "It can push those societies toward accelerated growth in crime, drug trades and illegal practices — essentially an undermining of the institutional trade order."

Through conducting surveys of practices, interviewing firms and officials, and analyzing similar data on institutional changes in Eastern Europe, Mexico, and Central America, he suggests building new regulatory institutions and implementing some sort of subsidized system to help firms meet those new standards in order to actually affect change.

"Mexico has benefited quite a bit from NAFTA (North American Free Trade Agreement)," McDermott says, "but on average, there has been virtually no increase in Mexican productivity since 1994. According to our research, helping Mexico rebuild would expand their ability to participate in a sophisticated manner in the international market."

And, he says, research has also shown that the cost benefit to the United States would be great because the local and private sectors in Mexico would also start investing. The security benefits would also be very important for both the United States and Mexico.

"When we directly help them improve the quality of their institutions, we're helping ourselves," he says.

McDermott plans to continue his research into NAFTA and East-Central European countries and extend that research into Central America (CAFTA) and South America.

"There are these different regimes throughout the world, and we need to learn from one another to understand how they're resolving their problems," he says. "At the end of the day, we all have similar problems, so there are great opportunities to learn and accelerate solutions."

By Madeleine Vath