9 March, 2018
visibility 1Foreign 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 The main objective of this research paper is to investigate how significant the global trade factor is in the overall growth of the California's state economy. The paper seeks to outline how trade impacts on the employment levels and how its variance may shift employment and output rates among a state’s industrial sector. In addition to this, the research also looks into the options that the local firms and policy makers have in the face of very competitive global markets and how trade affects their occupational segmentation and the statistical distribution of their wages and employment modalities. Other specific objectives of this study are:
- To investigate whether trade flows and fluctuations affect a state’s decisions on production processes and locations.
- To investigates on the effects of foreign trade on the growth if the general inequality in relative wages and the demand for alternative types of labor.
- To find out how the state government can assist in the revival of foreign trade and what options policy makers may indulge in for the general good of California’s economy.
9 March, 2018