Foreign Trade Issues in California’s Economic Growth

Due to the expansive nature of the production industry in California, this research seeks to indulge in the role played by foreign trade in economic growth within two major sectors namely the computer and electronics industry and the wider food processing sector. California’s manufacturing industries are sub-segmented into two categories; high-trade-flow and low-trade-flow sectors, depending on whether their respective trade accounts for a significant share of the whole of U.S.A’s shipments and domestic sales. (Richard and Werner 19) Industries are further divided into sectors with trade surpluses and those with trade deficits. On the manufacturing side, the computer and electronics industry depicts a high-trade-flow sector that displays a current trade deficit, while the food processing and general agricultural sector depicts of a low-trade-flow sector producing an overall trade surplus. (Richard and Werner 56)

Computer and Electronics Sector

This sector exhibits a high level of global linkages dependency coupled together with geographic location of production which play an integral part to the rates and characteristics of trade growth. Both the international sales and imported inputs are fundamental to this area’s growth. Most of the key firms in this sector reported a sale decline in their abroad dealings which reduced from two thirds to just a third of their total sales with majority of products manufactured in the areas where they are sold. (Kroll 23) Imports also play a vital role in production with computer hardware firms importing about a fifth of their inputs directly from their international suppliers and assembly done in their California premises. The Hardware firms facing little or minimal competition and producing customized products are less likely to produce outside California since global production negatively influences the characteristics of the firm’s labor force. (Kroll 21) Technical, professional and administrative staff is very reserved to the idea of overseas production.

Food-Processing Industry

Contrast to the computer sector, global linkages offer much less significant incentives to California’s food processing industry. Most of the key players in this sector have been in business for over half a century or longer, and possess quite a number of overseas production facilities and affiliates. (Kroll 14) Generally, the sales of processed foods has grown slower in the recent past and most of these firms exported only10% or less of their total outputs in 2010 with the exception of citrus and almond producers. Many of these producers faced stiff competition from overseas markets since this industry is highly geographically segmented. Because of California’s food processing peculiar nature of diversifying into local production at international geographical locations the work force is limited only to administrative workers unlike the computer industry. (Kroll 14)

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