Question

In: Economics

“In 2014, “the United States exported $2.34 trillion worth of goods and services—an all-time record. Exports...

“In 2014, “the United States exported $2.34 trillion worth of goods and services—an all-time record. Exports from the United States in 2014 equaled the entire gross domestic product of Brazil and exceeded all commercial output in India, Italy, or Mexico. What is more, exports are an increasingly important aspect of the U.S. economy.” (New top markets series provides data, 2015)

In your thread, complete the following:

Discuss economic theory related to the quote above. Be sure to include a definition of exports and the way in which exports are counted in the measurement of Gross Domestic Product (GDP) within your discussion.

Locate and incorporate outside research that gives evidence and explanation as to the possible causes of this growth in exports. Provide an example of 1 particular industry or country with which export quantity has increased.

Integrate biblical insights into your thread. In what way does Scripture influence our attitudes and actions in international trade? 300 word min

Solutions

Expert Solution

Answer: The term export means sending of goods or services produced in one country to another country. The seller of such goods and services is referred to as an exporter; the foreign buyer is referred to as an importer.  Export of goods often requires involvement of customs authorities. An export's counterpart is an import.

Economic theory related to the quote above is export based where exports play an important role in the US economy, influencing the level of economic growth, employment and the balance of payments. In the post-war period, lower transport costs, globalisation, economies of scale and reduced tariff barriers have all helped exports become a bigger share of national income.

Causes of growth of export

  • Employment. Growth in exports can create employment. For example, the growth in car exports has created many jobs in car industries, such as BMW factory in Oxford, and Nissan in Sunderland. Traditionally export jobs have been in manufacturing industries – an important source of full-time employment, especially in industrial regions. In recent years, exports have become more diversified with a greater reliance on service sector based exports, for example, computer programming.
  • Economic growth. Exports are a component of aggregate demand (AD). Rising exports will help increase AD and cause higher economic growth. Growth in exports can also have a knock on effect to related ‘service industries.’ For example, the success of car exports in Sunderland will help the local economy with local clubs and shops benefiting from increased spending. Similarly, a fall in exports, during a global economic downturn can have a big negative impact on UK economy.
  • Current account deficit. The strength of exports has a large role in determining the current account deficit. In the past few decades, the UK has had a persistent current account deficit, which many attribute to the UK’s relative poor export performance.

Exports are counted in the measurement of Gross Domestic Product (GDP) where Exports (X) represents gross exports. GDP captures the amount a country produces, including goods and services produced for other nations' consumption, therefore exports are added. Note that C, G, and I are expenditures on final goods and services; expenditures on intermediate goods and services do not count. GDP is important because it gives a bird's-eye view of how an economy is doing. If GDP speeds up, it can be a sign that good things are happening or are about to happen in a number of areas — people getting more jobs or better pay, for example, or businesses feeling confident enough to invest more.

Example of a particular industry or country with which export quantity has increased is US, UK and many more. On April 12, the US Department of Commerce announced that US exports of goods and services in February 2012 topped $181 billion, a new monthly record. Exports in 2011 reached $2.1 trillion, eclipsing the previous annual record set in 2008 by nearly $300 billion. Since the Great Recession ended, exports have accounted for half of US economic growth * --about four times exports’ weight in the economy-- and clearly been one of the bright spots in a rather cloudy economic picture. Externally, the global (ex-US) economy is growing faster than at home, which stimulates exports. Moreover, the US is a globally competitive supplier of many of the goods and services needed by rapidly developing economies—ranging from food and pharmaceuticals to aircraft and professional services. So the overseas demand and potential are there.Domestically, exports can play a major role in the restructuring of the economy from excessive dependence on (debt-driven) consumption. Housing is still in a deep slump and consumption, which represents 70% of the economy, has to contend with structural pressures such as stagnant real wages, household deleveraging and attempts to boost savings, and—one of these days—cuts by a federal government put on a spending diet.

Conclusion

US exports are in a largely unheralded growth phase. This will provide a much needed boost to the economy, offset some of the weaker domestic sectors and could potentially play a major role in the restructuring of the American economy.


Related Solutions

In 2010, the economy of the Utopia exported goods worth $232 billion and services worth another...
In 2010, the economy of the Utopia exported goods worth $232 billion and services worth another $87 billion. It imported goods worth $225 billion and services worth $56 billion. Receipts of income from abroad were $110 billion while income payments going abroad were $91 billion. Government transfers from the Utopia to the rest of the world were $23 billion, while various Utopia government agencies received payments of $16 billion from the rest of the world. Calculate Utopia’s merchandise trade balance...
In 2010, the economy of the Utopia exported goods worth $232 billion and services worth another...
In 2010, the economy of the Utopia exported goods worth $232 billion and services worth another $87 billion. It imported goods worth $225 billion and services worth $56 billion. Receipts of income from abroad were $110 billion while income payments going abroad were $91 billion. Government transfers from the Utopia to the rest of the world were $23 billion, while various Utopia government agencies received payments of $16 billion from the rest of the world. a) Calculate Utopia’s merchandise trade...
In 2010, Australia exported 583.2 billion (all figuresare in A$) worth of goods and 126.2...
In 2010, Australia exported 583.2 billion (all figures are in A$) worth of goods and 126.2 billion worth of services. Also they imported 605.3 billion of goods and 147.6 billion of services. If Int. Trade Related income was –7.6 billion and net transfers were –2.3 billion, what was Australia’s Balance of Trade for 2010?
In 2020 the United States will use some $10 trillion of manufactured goods as measured by...
In 2020 the United States will use some $10 trillion of manufactured goods as measured by the price level as it will be in 2020—producing $9 trillion and paying for the extra $1 trillion by exporting services. Let’s use that as our unit of the quantity of manufactures—$1 worth at 2020 prices is equal to one unit of manufactured goods. And let’s set our index of the price of manufactured goods in 2000 equal to 1. Suppose the supply curve...
In 2010, a country imported goods worth $500 billion and exported goods worth $443 billion. It...
In 2010, a country imported goods worth $500 billion and exported goods worth $443 billion. It exported services worth $248 billion and imported services worth $330 billion. Payments on investments abroad totaled $199 billion, while returns paid on foreign investments were $125 billion. Unilateral transfers from the country to other nations amounted to $94 billion. What was the country’s current account deficit for 2010? A. $70 billion B. $159 billion C. $142 billion D. $65 billion
If the United States imports more goods from abroad than it exports, then foreigners will tend...
If the United States imports more goods from abroad than it exports, then foreigners will tend to have a surplus of US dollars. What will this do to the value of the dollar with respect to foreign currencies? What is the corresponding effect on foreign investments in the United States?  
Assume that last month China exported goods worth 350 billion yuan and imported goods worth 331.6 billion yuan.
Assume that last month China exported goods worth 350 billion yuan and imported goods worth 331.6 billion yuan.  This month China’s exports are 359.7 billion yuan and their imports are 366.9 billion yuan. Compute China’s trade balance for each of the past two months separately. Over the entire period of the two months, did China experience a trade imbalance? Explain
The United States has almost $25 Trillion in debt of which $20 Trillion trades daily as...
The United States has almost $25 Trillion in debt of which $20 Trillion trades daily as government bills, bonds, and notes – obligations which in theory have to be retired when they mature. Lately the interest rates have been below 2% reflecting an economy struggling to grow. What impact will that have on the ability to retire the debt?
Between 2000 - 2010: What are the main goods and services the United States traded internationally?...
Between 2000 - 2010: What are the main goods and services the United States traded internationally? What trade barriers were in place during that decade? What are two pros and two cons of the trade barriers used?
Historically the United States has always enjoyed being the world's largest producer of goods and services....
Historically the United States has always enjoyed being the world's largest producer of goods and services. However, it appears that all of that will change shortly. According to The Independent, in an article dated February 1, 2007, by the 2030s China's GDP will become larger than the United States' GDP based on their current growth rate and by the 2040s India's GDP will also become larger than the United States' GDP as well. This means that the United States will...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT