IBU5IBE International Business

Table 2 Growth of Exports of USA (in’000 USD) 

Exports, remained flat since 1960s and showed growth after 1970s. However, the trade balance has remained negative since 1962 and has by and large shown a growing trend , with the exception of the period during the Asian Financial Crisis.  Overall, USA exports achieved a new peak in 2000 but exports declined slightly following the peak but stared increasing in 2000.

The percentage of US Exports in the world exports has decreased continuously since 1962 with few minor exceptions in the late 1980s, during the sub prime crisis of 1997 and during the Global Financial Crisis and 2007. The trend here is that US exports tend to perform well during periods of global crises. There could be several reasons to this. Exports from other countries may be lower in demand, which may lead to an improvement in the share of US exports in world export. In any case, US exports seem to be recession proof. The share of US exports in the world have started increasing in the recent times.

A major trend that has been consistent over the period of observation is that the trade deficit (or the negative trade balance) has continued to rise without falling sharply. The trade deficit only fell 1982-83 2008-2009, 2011-2012

In 1962, the US Congress Passed the Expansion of Trade Act, in accordance to General Agreement on Tariff and Trade Agreement. Tariff as well as non-tariff barriers were reduced. Import duties were cut across the board. An average of 35% reduction in import duties for manufactured goods and 20% average reduction in agricultural goods was achieved. (Canto, 1983 ). The idea behind such a policy was to promote greater trade. It was expected that given the lower import barriers, other countries would reciprocate and increase access to their markets for US. However, the net balance relfects that imports seem to have grown more than exports, and that this idea may have not been successful. The falling share of exports may alsoreflect the same story. However,  there is also crtiticism that USA seems to only have reduced the tariff barriers to trade while not being so succcessful in the lowring of the non trade barriers. (Canto, 1983 ) 

During the Asian subprime Crisis of 1997 (Demyanyk & Hemert, 2009), US exports remained flat and grew further post 1999 despite the odds of lower import demand from Asia. However, US exports fell sharply during the financial crisis. However, exports recovered as sharply as well, showing a higher growth rate than the USA and then again in 2014. The year 2007, there was sub-prime housing crisis in the USA which then morphed into a global financial crisis. (Demyanyk & Hemert, 2009) The share of US exports seems to have grown during this period. During this time, countries allowed for greater budget deficits in order to stimulate demand. During the same period, the Federal Reserve Bank also, initiated quantitative easing which decreased the value of the US Dollar, thereby increasing the competitiveness of US exports and decreasing the competitiveness of exports from countries such as China whose currency is valued low.

In the Economic Survey of 2016, the OECD (Organization for Economic Co-operation and Development, 2017) commended the United States for achieving better recovery from the Global Financial Crisis than most countries in the OECD, including heavyweights like Australia and UK. Exports seemed to have helped in this recovery.

Table 3 Trade Openness

Source for GDP: Federal Reserve Bank of St. Louis, 2018

Trade Openness, in general, has increased with the exception of a few years in the year 2000, the year of the East Asian Financial Crisis (1997), the Global Financial Crisis of 2008 and 2009, as well as the last five years of the data observation. Generally speaking, trade openness has consistently increased both due to increase in exports as well as imports. In 2015, Trade openness are slightly but was nowhere near the peak of 2011. The peak of trade Openness was achieved just two years after the Global Financial Crisis ended.  However, the decrease in trade in the last five years of observation is in line with the world trade, wherein the general trade openness has decreased (and was predicted to increase in 2017) (Berthier, Monfort, & Stoliaroff-Pépin, 2017) . Some believe that World Trade may have peaked. (Hoekman, 2015)

Table 4 RCA Table for 1962

 Table 5 RCA Table for 1990

Table 6 RCA for 1990

The items that provide the most relative comparative advantage among the manufacturing industries have not changed much from 1962 to 1990. However, in 2017, USA seems to have exported more finished goods than raw goods. These are light manufacturing goods and not heavy or capital goods such as motor vehicles and manufacturing devices. However, this is not away from the unexpected global trend of increase in manufacturing of light goods, even among developed countries. (United Nations Conference on Trade and Development, 2013) For example, the item Glass has been removed from the list and Glassware has made it to the top ten good exported. Similarly, leather has been replaced by goods manufactured of leather, or artificial leather and reconstituted leather.

Overall, USA has always has a relative Comparative Advantage in exports of non ferrous metals and this has not changed over the last 55 years. Steel and other mineral manufactures were items that provided Relative Comparative Advantage but have declined over the period.

Export Diversification is also, an important parameter while considering the Revealed Comparative advantage of any country. (United Nations Conference on Trade and Development, 2013). The diversity in trade specialization of the USA for manufacturing goods has not dropped over the years. It ranges from metals and mineral manufactures to leather and glass articles and is not focused simply on a particular cluster of industries such as minerals and metals.

Table 7 Top Export Partners 1962

The top 10 export partners were identified as above . The World and Special cases were featured at number 1 and number 3 in this list. However, the World as a partner cannot be taken as that would be redundant and no information is available for the special cases. Hence, those are not counted. There were two Asian countries, one South American country, two North American countries and five European countries that formed the Top ten export partners of the USA.

Canada imported more that 2,5 times the goods than the next big importing country Japan. There is a polarization in the amount of goods imported.

Table 8 Top Export Partners 1990

In 1990, Canada became the remained trading partner of USA. India and Venezuela were no longer top importing countries and Australia became an important country for US exports. The traditional trading partners, Netherlands, Germany, Canada, Mexico and Japan remained the top trading partners.  Another Asian country Republic of Korea joined the ranks as one of the top trading partners of USA.

Canada is a heavy weight trading partner as it imported more 1.5 times the goods as the next importing country i.e Japan. This shows that the gap decreased.

The traditional import partners more or less retained their positions. However, China and Brazil became an important trading partner. This is coincident with the rise of BRIC, the cohort of developing countries that were expected to rise fast during this decade. These Countries were Brazil, Russia, India and China.  (Mpoyi, July 2012) The biggest increase has been that of China. Exports of American goods to China did not even figure in the top 10, while in 2017, China was the third biggest importing country from USA. China imported nearly double of the next biggest importing country, Japan. Additionally, Mexico too moved up in the ranks. This reflects the rise of developing countries on the whole, including Mexico and China.

The Decline of European export partners , however, has not occurred. For example, Netherlands remained the eighth highest importing partner of USA in 2017 (same as 1990) but imported goods worth nearly three times the dollar value of the imports in 1990.

Most notably, no country from the Middle East or Africa was a part of this list. Saudi Arabia and UAE may be a part of the top 20 partners (according to personal analysis) despite having Free Trade Agreements with a number of countries in the Middle eastern and North African regions such as Oman, Israel, Jordan, Morocco etc. (Office of the United States Trade Representative, 2018)  The concentration of the largest trading partners has mostly been East and South East Asia, Southern Europe and the North American region with two South American countries and Australia being a part of the list.

Mexico and Canada an important trading partner of the USA and has always been. The North Atlantic Free Trade Agreement was signed to boost these partnerships. (Office of the United States Trade Representative, 2018) NAFTA came into force in 1994, following which US exports to Mexico, have increased. A repeal of NAFTA will hurt this source of revenues.

Table 1 USA Exports and Trade Balance Since 1980

Table 2 Growth of Exports of USA (in’000 USD)

Exports, remained flat since 1960s and showed growth after 1970s. However, the trade balance has remained negative since 1962 and has by and large shown a growing trend , with the exception of the period during the Asian Financial Crisis.  Overall, USA exports achieved a new peak in 2000 but exports declined slightly following the peak but stared increasing in 2000.

The percentage of US Exports in the world exports has decreased continuously since 1962 with few minor exceptions in the late 1980s, during the sub prime crisis of 1997 and during the Global Financial Crisis and 2007. The trend here is that US exports tend to perform well during periods of global crises. There could be several reasons to this. Exports from other countries may be lower in demand, which may lead to an improvement in the share of US exports in world export. In any case, US exports seem to be recession proof. The share of US exports in the world have started increasing in the recent times.

A major trend that has been consistent over the period of observation is that the trade deficit (or the negative trade balance) has continued to rise without falling sharply. The trade deficit only fell 1982-83 2008-2009, 2011-2012

In 1962, the US Congress Passed the Expansion of Trade Act, in accordance to General Agreement on Tariff and Trade Agreement. Tariff as well as non-tariff barriers were reduced. Import duties were cut across the board. An average of 35% reduction in import duties for manufactured goods and 20% average reduction in agricultural goods was achieved. (Canto, 1983 ). The idea behind such a policy was to promote greater trade. It was expected that given the lower import barriers, other countries would reciprocate and increase access to their markets for US. However, the net balance relfects that imports seem to have grown more than exports, and that this idea may have not been successful. The falling share of exports may alsoreflect the same story. However,  there is also crtiticism that USA seems to only have reduced the tariff barriers to trade while not being so succcessful in the lowring of the non trade barriers. (Canto, 1983 ) 

During the Asian subprime Crisis of 1997 (Demyanyk & Hemert, 2009), US exports remained flat and grew further post 1999 despite the odds of lower import demand from Asia. However, US exports fell sharply during the financial crisis. However, exports recovered as sharply as well, showing a higher growth rate than the USA and then again in 2014. The year 2007, there was sub-prime housing crisis in the USA which then morphed into a global financial crisis. (Demyanyk & Hemert, 2009) The share of US exports seems to have grown during this period. During this time, countries allowed for greater budget deficits in order to stimulate demand. During the same period, the Federal Reserve Bank also, initiated quantitative easing which decreased the value of the US Dollar, thereby increasing the competitiveness of US exports and decreasing the competitiveness of exports from countries such as China whose currency is valued low.

 In the Economic Survey of 2016, the OECD (Organization for Economic Co-operation and Development, 2017) commended the United States for achieving better recovery from the Global Financial Crisis than most countries in the OECD, including heavyweights like Australia and UK. Exports seemed to have helped in this recovery.

Table 3 Trade Openness

Source for GDP: Federal Reserve Bank of St. Louis, 2018

Trade Openness, in general, has increased with the exception of a few years in the year 2000, the year of the East Asian Financial Crisis (1997), the Global Financial Crisis of 2008 and 2009, as well as the last five years of the data observation. Generally speaking, trade openness has consistently increased both due to increase in exports as well as imports. In 2015, Trade openness are slightly but was nowhere near the peak of 2011. The peak of trade Openness was achieved just two years after the Global Financial Crisis ended.  However, the decrease in trade in the last five years of observation is in line with the world trade, wherein the general trade openness has decreased (and was predicted to increase in 2017) (Berthier, Monfort, & Stoliaroff-Pépin, 2017) . Some believe that World Trade may have peaked. (Hoekman, 2015)

Table 4 RCA Table for 1962

Table 5 RCA Table for 1990

 Table 6 RCA for 1990

The items that provide the most relative comparative advantage among the manufacturing industries have not changed much from 1962 to 1990. However, in 2017, USA seems to have exported more finished goods than raw goods. These are light manufacturing goods and not heavy or capital goods such as motor vehicles and manufacturing devices. However, this is not away from the unexpected global trend of increase in manufacturing of light goods, even among developed countries. (United Nations Conference on Trade and Development, 2013) For example, the item Glass has been removed from the list and Glassware has made it to the top ten good exported. Similarly, leather has been replaced by goods manufactured of leather, or artificial leather and reconstituted leather.

Overall, USA has always has a relative Comparative Advantage in exports of non ferrous metals and this has not changed over the last 55 years. Steel and other mineral manufactures were items that provided Relative Comparative Advantage but have declined over the period.

Export Diversification is also, an important parameter while considering the Revealed Comparative advantage of any country. (United Nations Conference on Trade and Development, 2013). The diversity in trade specialization of the USA for manufacturing goods has not dropped over the years. It ranges from metals and mineral manufactures to leather and glass articles and is not focused simply on a particular cluster of industries such as minerals and metals.

Table 7 Top Export Partners 1962

The top 10 export partners were identified as above . The World and Special cases were featured at number 1 and number 3 in this list. However, the World as a partner cannot be taken as that would be redundant and no information is available for the special cases. Hence, those are not counted. There were two Asian countries, one South American country, two North American countries and five European countries that formed the Top ten export partners of the USA.

Canada imported more that 2,5 times the goods than the next big importing country Japan. There is a polarization in the amount of goods imported.

Table 8 Top Export Partners 1990

In 1990, Canada became the remained trading partner of USA. India and Venezuela were no longer top importing countries and Australia became an important country for US exports. The traditional trading partners, Netherlands, Germany, Canada, Mexico and Japan remained the top trading partners.  Another Asian country Republic of Korea joined the ranks as one of the top trading partners of USA.

Canada is a heavy weight trading partner as it imported more 1.5 times the goods as the next importing country i.e Japan. This shows that the gap decreased.

The traditional import partners more or less retained their positions. However, China and Brazil became an important trading partner. This is coincident with the rise of BRIC, the cohort of developing countries that were expected to rise fast during this decade. These Countries were Brazil, Russia, India and China.  (Mpoyi, July 2012) The biggest increase has been that of China. Exports of American goods to China did not even figure in the top 10, while in 2017, China was the third biggest importing country from USA. China imported nearly double of the next biggest importing country, Japan. Additionally, Mexico too moved up in the ranks. This reflects the rise of developing countries on the whole, including Mexico and China.

The Decline of European export partners , however, has not occurred. For example, Netherlands remained the eighth highest importing partner of USA in 2017 (same as 1990) but imported goods worth nearly three times the dollar value of the imports in 1990.

Most notably, no country from the Middle East or Africa was a part of this list. Saudi Arabia and UAE may be a part of the top 20 partners (according to personal analysis) despite having Free Trade Agreements with a number of countries in the Middle eastern and North African regions such as Oman, Israel, Jordan, Morocco etc. (Office of the United States Trade Representative, 2018)  The concentration of the largest trading partners has mostly been East and South East Asia, Southern Europe and the North American region with two South American countries and Australia being a part of the list.

Mexico and Canada an important trading partner of the USA and has always been. The North Atlantic Free Trade Agreement was signed to boost these partnerships. (Office of the United States Trade Representative, 2018) NAFTA came into force in 1994, following which US exports to Mexico, have increased. A repeal of NAFTA will hurt this source of revenues.

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