Question

Why are US Exports So Competitive?

Here is a summary of the case: This closing case can be used to help students understand why U.S. exports are so competitive, what is unique about U.S. exports, and what has been driving their recent rise in a bleak global economic environment. This closing case provides substantial evidence for the competitiveness of U.S. exports. In 2013, the United States exported a record $1.58 trillion, with an enviable 8.4% annual increase. The United States contributed approximately 89% of the value added of its exports.

U.S. exports have to deliver value, they have to be rare and hard to imitate, and have to organize themselves in a more productive and efficient manner relative to their global rivals to sustain their competitiveness. While the products themselves have to be strong and competitive, Uncle Sam has also helped. At least ten federal agencies offer export assistance, including the departments of Commerce, State, Treasury, Energy, and Agriculture. Going beyond routine export assistance, new initiatives focus on negotiating free trade agreements (FTAs) with trading partners. In addition to FTAs, the U.S. government often negotiates with other foreign governments for better market access and terms of trade for U.S. exporters. Informal norms and values, both at home and abroad, play a role in U.S. exports.

QUESTION - On Ethics: Prior to taking this class and studying this case, have you often heard or read about the decline of US export competitiveness? What are the social and ethical implications of such excessive (one-sided) negative reporting? Does this case change your mind? Why?

Answer 1

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EXPLANATION:

The profitability that the U.S. export network has been experiencing a decline. The U.S. has been more open towards the trading system and non-discriminatory while standard trade relations adjust to the multilateral world based on rules. Over the past decade, manufacturing has changed geographically, and while the US is declining the Chinese are increasing in global exports. US provides federal export agencies such as; Departments of Commerce, Finance, Education , Energy and U.S. Trade Representative (USTR).

New initiatives focus on negotiating free trade agreements with trading partners. With negative reporting other countries will try and obtain higher proportion of the high technology goods than other emerging nations in order to be technically superior. The higher demand will further expand the costs of the exports from the US. The developing nations will be ready to pay more to acquire the technology.

The Competitive nations of the US will increase the productions of similar or competitive goods anticipating for the opportunity to increase their exports when the supply from US declines. When the exports from US does not decrease it would mean the competitor will have to decrease the prices to sell the over produced goods by them. The negative reporting is also unethical as it leads to even further appreciation of the US Dollar, Since, the export is limited the demand will increase the buyer will require to pay the price of the imports in US Dollars that they will have to buy thus appreciating the currency.

The negative reporting of the decline in exports by US may sometimes lead the poorer nations to sign the Free trade Agreements with US in order to gain access to the superior technologies. The free trade gives a right to access to the economy of the poorer country and will hamper the economy of the smaller nation. Thus negative reporting of decline in export by the US has an overall effect of increase in export, increase in prices of the export, appreciation of the currency and the even exclusive access to the economies of the smaller countries.

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