International Trade Research Paper Example | Topics and Well Written Essays - 1250 words

International Trade - Research Paper ExampleIt is worth pondering on the root causes behind the ever increasing global trade. The paper aims at exploring how the trade agreement called NAFTA that the US has entered into with Mexico and Canada has impacted on the domestic industries and the US parsimony at large. The paper would also explore how the devaluation of the US Dollar against the Chinese Yuan gouge bring respite to the US manufacturing industries. Suranovic (2010) describes about some definitive key-reasons that decide about any trade between the nations and they are worth pondering to understand the burgeoning global trade. Resource Advantage Each earth is invest with certain natural options such as minerals, water, defeat, fossil fuels, and essential raw materials and accordingly their strength lies in manufacturing those finished right-hand(a)s where such resources are necessary. Obviously, such resource pool will put certain countries in advantage over early(a)s . Technological Superiority Technological superiority of one country over other in a particular product will facilitate production of better quality goods at lower cost and that superiority puts one country ahead of others in a particular good. If the US produces Boeing aircraft and fighters or other sophisticated warheads then it is because of the technological superiority that the US exerts over others in this field. ... It is a fact that the US has absolute advantage in producing grains as it needs fewer real resources relative to the most of the countries in the world. The availability of huge outlandish land and the use of machines are the major reasons in having absolute advantage in agriculture. The country uses minimal labor per unit area of agricultural land increasing the productivity levels manifold however, it is essential to note that absolute cost advantage does not determine the production and allocation of labor for producing a good but it is the comparative advanta ge that gives rise to the production of a particular good in that country. The comparative advantage takes into account the opportunity cost plot of ground producing a particular good in that country (Suranovic, 2011). This fundamental reality drives the trade globally and the NAFTA agreement is to be seen in this light. US Trade fit with NAFTA Partners and the World in the year 1989 and 2009 (In billions of current USD) Source OLeary et al, 2012, p13. It is important to note here that there is no appreciable change in sense of balance of trade in agriculture commodity with Mexico and Canada there is no significant impact on the US labor force involved in agriculture. In all merchandise trade with Mexico and Canada in 2009, imports have increased by almost 45 billion and 11 billion USD respectively but so is the case with world trade which shows negative balance of 500 billion USD. This clearly shows that NAFTA trade has followed the world trend only and nothing specific can be a ttributed to NAFTA agreement that the US has entered into (OLeary et al, 2012). Below mentioned table indicates about the employment changes between 1989 and 2008 in the key industries in the US. This