Importance of The Export Import Business To Global International market
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International trade allows manufacturers and distributors to seek out export products, export services, and export components produced in foreign countries. Companies acquire them because of cost advantages or in order to learn about advanced technical methods used abroad; for example, methods that help reduce the cost of production lower prices and in turn, induce more consumption thus producing increased profit.
Trade also enables firms to acquire resources that are not available at home.
Besides providing consumers with a variety of goods and services, international trade increases incomes and employment.
In 1990, the number of U.S. jobs supported by merchandise exports to all
foreign markets reached 7.2 million. U.S. merchandise exports to all foreign
markets contributed to 25 percent of the growth in U.S. civilian jobs
between 1986 and 1990 (Davies, 1992).
It is estimated that each billion dollars of merchandise exports supports about 25,000 jobs. A survey of 3,032 small- and medium-sized manufacturing enterprises in Canada over a three year period (1994-1997) strongly indicates that growth in exports is associated with an increase in jobs (Lefebvre and Lefebvre, 2000).
Even though imports are associated with loss of jobs due to plant closings or production cutbacks of domestic industries, the export job-generation effect is about 7.5 percent larger than the import job-loss effect (Belous and Wyckoff, 1987).
During the 1979-1999 periods, about 6.4 million U.S. jobs were displaced
due to import competition. Such losses are largely concentrated in
electrical/nonelectrical machinery, apparel, motor vehicles, and blast furnaces.
A quarter of displaced workers reported earning losses of about 30
percent, while 36 percent indicated comparable or higher earnings than from their previous job (Kletzer, 2001).
Most occupations shows net job gain from an equal amount of exports and imports except for blue-collar occupations, which are shrinking in most developed countries due to increasing pressure from low-wage imports.
Exports create high-wage employment. In a study of recent wage statistics,
the U.S. Trade Representative’s Office found that U.S. workers employed
in export-related jobs earn 17 percent more than the average worker
in the United States.
Export-related wages are higher for manufacturing and service sector jobs. While service-related jobs generally pay less than manufacturing jobs, service jobs in the export sector were found to pay more on average than manufacturing jobs in the overall economy (U.S. Department of Commerce, 1994).
A recent study on wages and trade finds a strong positive correlation between export intensity and wages. This could be partly explained by the fact that export intensive sectors tend to show higher levels of productivity than other firms.
It is also consistent with economic theory, as industries in which a nation enjoys comparative advantage are likely to be those in which workers are more productive and therefore receive higher wages.
It also shows that greater import penetration is associated with greater demand elasticity, which reduces workers’bargaining power.
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