ABSTRACT
The opening of the Mexican economy in the 1980s and the signing and operation of the North American Free Trade Agreement (NAFTA) in the 1990s has turned into economic integration.
In this close economic relationship, a very important issue for the Mexican economy is the current account balance of the balance of payments, which has almost always been negative since the late 1940s; the main determinant of the current account deficit being the trade deficit. Moreover, economic crises in the recent past in Mexico (1976-7, 1981-2 and 1994-5), have all been caused by foreign exchange crises, expressed as foreign exchange shortages brought about by an unmanageable current account deficit and massive capital flight.
