Question

Topic: International Trade Question/Prompt: In a recent Forbes article, author Ken Roberts comments the following regarding international trade data from 2017. “In the last quarter-century, U.S. exports have grown from $448.16 billion to $1.55 trillion…In that time, the United States has gone from having 86 export categories valued at more than $1 billion in value to having 248 above $1 billion, the final tally for 2017. We have gone from having six of the roughly 1,265 export categories above $10 billion in 1993 to 22 today.” In this threaded discussion, complete the following 1) Discuss the economic theory related to the quote above. Be sure to include a definition of exports and the way in which we count exports in the measurement of Gross Domestic Product (GDP) within your discussion. 2) Locate and incorporate outside research that gives evidence and explanation as to the possible causes of this growth in exports. Provide an example of one particular industry or country with which export quantity has increased. 3) - Integrate biblical insights into your discussion board thread. In what way does scripture influence our attitudes and actions in international trade?

Answer 1

Ans)1

When a country exports goods, it sells them to a foreign market, that is, to consumers, businesses, or governments in another country. Exports help to bring money into the country, which increases the exporting nation's GDP. It can also help to achieve a surplus in the Balance of Payment account.

Exports have become an increasingly important source of revenue for both national and regional firms in the United States. U.S. exports are rising rapidly an example of which is the rapid growth of U.S. export markets in the developing nations of East Asia and Latin America. Most trade theories in the economics literature focus on sources of comparative advantage. These theories postulate that all nations can gain from trade if each specializes in producing what they are relatively more efficient at producing, based on their strengths. The empirical evidence shows that comparative advantage is indeed relevant. United States trade policy has varied widely through various historical and industrial periods. As a major developed nation, the U.S. has relied heavily on the import of raw materials and the export of finished goods. This is majorly in consonance with the comparative advantage theory of trade wherein the US has a comparative advantage in the production of products that require technical or other specific skills.

Ans 2)

A research by Timothy J. Schmidt suggests that export expansion of the US can be attributted to two major reasons: liberalisation and geographical expansion of exports. The paper explains that U.S. exports began to swell in 1973 after the breakdown of the Bretton Woods system of fixed exchange rates. In 1973 exchange rates were allowed to float. As the U.S. dollar depreciated, the foreign price of U.S. exports fell and the demand for U.S. goods abroad began to accelerate. Another significant stimulus to U.S. export growth since the early 1970s has been trade liberalization.

Secondly, the geographic distribution of U.S. exports has been shifting dramatically toward certain regions of developing nations. At the vanguard of this shift was East Asia. Rapid income growth and increased trade liberalization have transformed the developing nations of East Asia into a dynamic market for U.S. exports. The successful development of East Asia has influenced other developing countries, most notably in Latin America, to adopt similar policies for economic growth.  As a result, the developing nations of Latin America have also become important markets for U.S. exports.

Ans 3) Over the last ten years, economists such as Guiso, Sapienza, and Zingales have been exploring the relationship between culture, values, individual preferences and the economy, focusing on the unidirectional impact of culture on the economy. They have demonstrated empirically, for example, that the level of trust that people have in their country’s institutions and fellow citizens influence many aspects of economic activity such as international trade.

With reference to the Bible, Jesus is not condemning the market. In fact, in a story, by telling the rich young man to sell his possessions, he is asking him to utilize the market to help the poor. Jesus recognizes that the rich young man can better help the poor by selling his goods, presumably in an organized market. This way, he can take advantage of the mutual benefit advantages of the marketplace, maximizing the value of the sales and thus having more money to give to the poor. Thus this biblical support to trade also helps in active promotion of international trade.