International Focus Magazine Prototype Edition | Page 20

business

How much

A

s you wake up, get
dressed,
prepare
a cup of coffee,
grab breakfast and
quickly browse
internet before
driving off to work, you probably don’t realize how much
you are involved in International
Trade. The clothes that you wore
daily probably came from China,
Vietnam, or Indonesia; the coffee that you drank is probably
from Latin or South America, or
probably East Africa; your vehicle
is probably Japanese, Korean, or
German; and the web page that
you browse? It’s probably built in
India. International trade is the
exchange of services, goods, and
capital among various countries
and regions, without much hindrance.
You probably don’t care about
the term “international trade”,

20 iF Magazine | June 2016

however, you would more than
likely take your living expenses,
income, and quality of life very seriously. Therefore, you care about
international trade very much, although you probably don’t realize
it, yet.
If you are like me, you’d be
more than likely to enjoy some
stylish low price clothes, or a vast
variety of choices in vehicle supply. In general, consumers have
access to a greater variety of goods
and services from other countries,
at a lower cost.
What if you are skilled with
sewing, would you be able to
compete with the east and southeast Asia workers?
In theory, trade is good. In
practice, debate towards whether
importing foreign goods and exporting services has an adverse
effect on the domestic economy
(labor market in particular). In

the working paper, The Impact of
Trade on Labor Market Dynamics, which Ecomomist Maximiliano co-authored with Lorenzo
Caliendo and Fernando Parro,
they studied the effects of an increase in imports from China on
U.S. labor markets. They reproduced the large increase in imports from China between 2000
and 2007 and analyzed its effects
on U.S. labor markets across states
and industries. Result was found
that increased Chinese competition reduced manufacturing
employment by 0.6 percentage
points (or about 1 million jobs)
over 10 years. The more the industry is exposed to import competition from China, the more job
that industry loses.
How does trade help the U.S.
then? You may ask. Especially