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

International share - Research Paper ExampleIt is worth reflect on the root causes behind the ever increasing global trade. The paper aims at exploring how the trade engagement called NAFTA that the US has entered into with Mexico and Canada has impacted on the domestic industries and the US economy at large. The paper would also research how the devaluation of the US Dollar against the Chinese Yuan can bring respite to the US manufacturing industries. Suranovic (2010) describes about approximately important key-reasons that decide about any trade between the nations and they are worth pondering to take care the burgeoning global trade. Resource Advantage Each province is endowed with certain natural resources much(prenominal) as minerals, water, land, fossil fuels, and crucial raw materials and accordingly their strength lies in manufacturing those finished goods whither such resources are necessary. Obviously, such resource pool will put certain countries in profit over o thers. Technological favorable position Technological superiority of i country over other in a particular produce 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 whence 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 great agricultural 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 advantage that gives rise to the production of a particular good in that country. The comparative advantage takes into account the opportunity cost while 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 Balance 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 balance of trade in agriculture trade good 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 blackball balance of 500 billion USD. This clearly shows that NAFTA trade has followed the world trend only and nothing unique(pre dicate) can be attributed 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