ECON 214: Analyzing US Export Growth in International Trade

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This discussion board post analyzes the economic theory of export-led growth, defining exports and their impact on Gross Domestic Product (GDP). It examines the significant growth in US exports over the past quarter-century, referencing a Forbes article. The post explores factors contributing to this growth, such as improved relationships with trading partners, favorable exchange rates, and the role of multinational firms, providing specific examples of industries and countries experiencing export increases. The analysis also considers the influence of currency values, trade policies, and the creation of new commodities. The post further integrates biblical insights, reflecting on how scripture influences attitudes and actions in international trade, emphasizing the importance of ethical considerations in global economic activities.
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Running Head: PRINCIPLE OF MACROECONOMICS
Principle of Macroeconomics
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1PRINCIPLE OF MACROECONOMICS
Table of Contents
Answer: 1.........................................................................................................................................2
Answer: 2.........................................................................................................................................2
Answer: 3.........................................................................................................................................3
Reference List..................................................................................................................................4
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2PRINCIPLE OF MACROECONOMICS
Answer: 1
The economic theory related to growth in U.S. exports is the export led growth which
postulates how the expansion in GDP is marked by exports. Exports are goods that are shipped to
other countries to facilitate competition, consumer satisfaction and specialization of
commodities. Export raises the international trade and removal of trade barriers among nations.
Gross Domestic Product (GDP) is the value of all goods and services produced by domestic
measures within a specified time period counted annually mostly (Bakari & Mabrouki 2017).
More the level of exports, more is the level of GDP as sale of exports generate revenues
and grow the budget surplus of the economy. Exports are essential elements for the economic
growth as it sums to economy’s gross output. Countries with less trade restrictions and tariff rate
get the biggest profit from exports (Yüksel 2017). Exports give a stimulus to international trade
by pushing up the domestic activities with creation of opportunities, jobs and production levels.
This smoothens the development in businesses with flow in per capita incomes with high
employment bearing.
Answer: 2
U.S. covers one-fifth of world’s total export with 43 percent occurring from multinational
firms. The reason for such upsurge is the betterment of relationship with its top trading partners
such as Mexico, China and Canada. U.S. have a high exchange rate that benefitted as it made
imports cheaper such that U.S. produce goods at lower opportunity cost and selling it in more
countries (Shawa & Shen 2013). Reserve of foreign currency from the International Monetary
Fund (IMF) helped trading partners to gain from deposit of foreign currency. Treasury bills
propagated foreign trade as banks preferred cash to sovereign debt.
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3PRINCIPLE OF MACROECONOMICS
U.S. had a majority 52.3 percent of its export from motor vehicles. Export worth more
than a billion dollar was shipped from fourteen ports most of which went to Canada, China and
Mexico. U.S. earned 6.5 billion from this particular sector and ranked as the third biggest
exporter. Lowering the tariff rate attracted more investors to invest in new firms.
Answer: 3
The currency of an economy determines the quality of export and import. As U.S. had a
high exchange rate that made the dollar worth more flexible for quality growth. With more
exports, trade surplus went up that aggravated more output from firms making adequate
optimisation of resources. The release of fund flow in the economy accelerated consumer
spending, contributing to economic advancement (Novy 2013). This indicates that U.S. had a
steady rise in import coming as fall in imports also imply that countries other than domestic
economy is in better shape.
Barriers to trade slower export led growth. Strong trade policies and low tariff rate led
nations to import from U.S. The rise in exports dragged new entrepreneurs to create and develop
new commodities and collect the maximum output. Moreover, the efficiency rate and standard of
living in U.S. is extremely high making effective use of given resources. U.S. use capital
intensive techniques that leads to better production of resources at a faster rate.
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4PRINCIPLE OF MACROECONOMICS
Reference List
Bakari, S., & Mabrouki, M. (2017). Impact of exports and imports on economic growth: new
evidence from Panama. Journal of Smart Economic Growth, 2(1), 67-79.
Novy, D. (2013). Gravity redux: measuring international trade costs with panel data. Economic
inquiry, 51(1), 101-121.
Shawa, M. J., & Shen, Y. (2013). Causality relationship between foreign direct investment, GDP
growth and export for Tanzania. International Journal of Economics and Finance, 5(9),
13-19.
Yüksel, S. (2017). The impacts of research and development expenses on export and economic
growth. International Business and Accounting Research Journal, 1(1), 1-8.
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