Discuss: Theories in Trade and Foreign Direct Investment

Instructions
 FORMAT
 

Situation Analysis: Please include the following in your DISCUSSION. 
 a. Explain how the article addresses your topic.  Some questions are given to direct your discussion. 
 b. Provide examples as appropriate. 
 c. Research other articles to supplement your Discussion. 
 Argument: 

a.  In this section, discuss your position of whether you are "For or Against" any given situation involving this topic. 
 Recommendation: 
 a.  What is your recommendation and how do your anticipate the outcome? 
 Reference 
 APA Format

Based on the article below, What is the future of global trade and how does it effect the US economy and (another country that you'd like to work in someday?
https://unctad.org/news/global-trade-hits-record-high-285-trillion-2021-likely-be-subdued-2022

Article Review: Global trade

 

 

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Article Review: Global trade

Situational analysis

The article's content is relevant to my topic, "Theories in Trade and Foreign Direct Investment," since Vernon's production cycle theory, created in 1966, was used to explain specific forms of FDI undertaken by American firms in Western Europe (UNCTAD, 2022). Vernon identifies four phases in the manufacturing process: the innovative phase, the growth phase, the maturity phase, and the decline phase. According to the production cycle hypothesis, there was a spike in demand for manufactured goods like those produced in the United States following World War II in Europe. That's why it makes sense that trade was worth more in 2021, related to my thesis on how nations seek out innovative approaches to commerce after tragedy.

Argument

During the COVID-19 pandemic, the value of global trade was 25% higher than before the pandemic. This is because countries respond to tragedies like pandemics by working harder to improve the quality of their products in the hopes that a wider audience will like them. Thus, I agree that the global trade rate may have resulted from a lack of alternatives that countries worked their best to sustain their living.

What is the future of global trade, and how does it affect the US economy and another country that you'd like to work in someday?

Regionalization may become more common in international commerce due to numerous trade agreements, regional efforts, and "growing dependence on geographically proximate suppliers." Worldwide demand for eco-friendly goods may rise (UNCTAD, 2022). Since putting tariffs on China has yet to help reach any stated goals, the United States is now a threat by stepping up its protectionist policies. The U.S. trade imbalance keeps growing, which is to be anticipated given that it represents the difference between investment and saving and hence is unaffected by tariffs. While the massive budget deficit is the right policy in a crisis economy, it has the unintended consequence of reducing U.S. savings and increasing the trade imbalance.

Recommendation

However, since new trade agreements are being implemented, it is imperative that the enhanced logistics, such as ports and shipping businesses, be adapted to the problems of the COVID era to keep global trade higher than before.

 

 

References

UNCTAD (2022). Global trade hit a record high of $28.5 trillion in 2021 but will likely be subdued in 2022. https://unctad.org/news/global-trade-hits-record-high-285-trillion-2021-likely-be-subdued-2022

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