The article A Little-Noticed Fact
About Trade: It’s No Longer Rising points out that global trade is in fact declining over this year, remaining relatively flat in the first quarter and has fell
about .8 percent over the second quarter. These numbers per statisticians in
the Netherlands which happen to keep the best data. Trade in the United States
has fallen by more than $470 billion for American imports and exports over this
year, and fell by more than $200 billion in the previous year. The result of
the sluggish growth is pointed towards a global slowdown in which is now
becoming structural per Binyamin Appelbaum. With both presidential candidates
opposing the Trans-Pacific Partnership it is a sign in which global trade will
continue to decline. Christine Lagarde of the International Monetary Fund
stated “Curbing free trade would be stalling an engine that has brought unprecedented
welfare gains around the world over many decades.” The decline in global trade
can be pointed to china for they can make more of what they consume, and consume
more of what it makes, and making themselves less dependent on foreign direct
investment. China’s ever changing role in the global economy has led to these
changes in global trade.
I found this article as something
that shines a light on how the global economy truly is around the world. China’s
GDP growth hovers around 6 % which would be amazing here in the United States
(2%), however is far lower than where they were at nearly 12%. With China being
able to now support themselves this can cause harm to the United States as seen
by our imports and exports have gone down over the past 2 years. This decline
would benefit factory workers as there would be less imports however harms them
on the same token because of less exports. We then can reasonably assume the
United States and other countries are not able to operate at equilibrium on the
Heckscher-Ohlin model because of the clear winners and losers of trade.
I believe that one of the reasons that the US is trading less relates to my post from last week about Americans feelings toward trade. Americans are failing to see the benefits from trade and as a result, they tend to favor autarky out of fear of losing their jobs from trade. These views have pressured our politicians to make policies based off of poor knowledge of international trade. Globalization benefits the country as a whole, but our politicians still allow their policies to be influenced by a poor understanding of trade. This is why it is important that voters understand the true impact of trade before they vote on the 8th.
ReplyDeleteI couldn't agree with Ben more on this issue. Trade with other countries has been a major debate question that gets talked about on the surface, but never goes into depth about it when we hear our politicians telling us that its bad. We need trade to make this economy stronger and noticing in your article about how the trade has been rapidly declining is an issue that needs to be addressed and fixed but not with just generalities. Let the people know the true side of the story and go deeper than just the surface that way the general public is able to make a more educated decision pertaining to international trade.
ReplyDeleteI agree that the economy is more global now, countries like China and India have developed enough to take over large portions of the import, export business, and their impact on the economy is only going to grow even more as they become more developed.
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