Foreign Trade Issues in California’s Economic Growth

Introduction

Global trade is definitely of utmost significance to any country’s economy let alone that of California. Estimates point out that California exports, as a share of all goods and services produced and exported from the USA have decreased from 11.4% in 2009 to11.2% in 2010. This translates to a total decline in from 144,806 Million dollars in 2008 to 143,269 Million during the year 2010. In addition, trade through California’s ports has dropped dramatically during the last few years.

High-technology sectors such as aircrafts, computers, instruments and electronics represent more than 70% of all products exported by California producers. Processed foods together with agricultural products take the second place with about 10% share. Foreign trade is also fundamental to some of California’s main service sectors, like the film industry and tourism. Very scanty data is reported on the state’s imports but the overall U.S.A data indicates that California’s import record spans widely from computer and electronic hardware to textiles.

This research paper analyses the different causes and effects of foreign trade on California’s economy. Conceptually, it is expected that declining exports would hurt California’s economy since trade exports generally increase the output and employment in the manufacturing industries. The paper also investigates beyond the direct effects (such as job creation) and focuses on some collateral effects such as indirect consequences of foreign trade in sectors like the computer and food processing industries.

Problem Statement

Foreign trade plays a very crucial role in the U.S. economic welfare, and an even greater role in California’s state economy. The state government employs quite a number of trade-related programs aimed at the betterment of California’s economy. Moreover, there are state policies in place that should safeguard the improvement or rather the rise in international trade.

However, foreign trade especially exports from major California ports is lately on the decline. The state policy makers have overlooked some crucial emerging trends and have failed to develop a more impregnable vision of how to tackle the more dynamic and changing needs brought into existence by the growth in globalization while addressing other challenges confronting the state’s economy. This research probes in detail the issues of the decline in the expansion of foreign trade at the output (all goods and services) level and the resulting employment implications in California. It is based on a common understanding of the complexities emanating from rapid globalization and seeks to address several common misinterpretations.

Objectives

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