Foreign Trade Issues in California’s Economic Growth

These two major trade industries demonstrate that foreign trade has more potent affects in some industries more than on others. In high-trade-flow sectors, trade elaboration affects both the location of production and the labor force mix. Trade expansion impacts less in low-trade-flow industries either directly or in the short term.

California’s economic-development policy

Foreign trade directly implies on California’s economy through five main ways; the exploitation of overseas markets, import competition, importation of raw materials, direct investment to foreign markets by California firms, and foreign firm’s investment in economic activities within California. (Shatz 103) However, none of these means possesses a simple, one-way positive or negative impact. Expansion of exports generally translates to addition of jobs and relative tax income to California, but this trend may also lead to firms ultimately outsourcing their production lines abroad to countries where consumption is taking place. Production abroad in turn allows for rapid growth which may be inconceivable under the current domestic cost structure. This emerging trend may also provoke the growth of California-based support industries. (Richard and Werner 98)

Imported goods tend to compete with their California produced counterparts since they allow for lower-cost items expenditure by California consumers and lower-cost investments for California producers. Thus the state policy makers respond to these facts and trade opportunities with an understanding of the close correlation of the two. Furthermore, the overall exports and imports dynamics are among many other elements contributing the growth of the California’s foreign trade. Firms may consider established state programs as mechanisms that address their concerns over exports or imports as a single part of a larger economic and development machinery offered by the state government. (Kroll 26)

California’s trade-related programs

California’s trade-related programs are chiefly split into three types: programs directly related to foreign trade, competitiveness and firm retention. The state programs directly related to foreign trade focus entirely on exports with trade missions, marketing and foreign-trade offices taking the largest constituent of all export-related activities carried out by the Trade and Commerce Agency. (Kroll 33)

Many of these programs concentrate on education and employment training. The state also tries to tackle competitiveness using the California Economic Strategy Panel which main mandate is to establish a statewide economic-development policy that oversees the support for the evolution of new technologies, and technical support programs to California firms. (Shatz 265)

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