How Trade Affect the Economy

Topics: International trade, September 11 attacks, Free trade Pages: 3 (1074 words) Published: September 19, 2010
Destiney Clay
Mr. Gillispie
Economics 8th block
September 14, 2010
How the International trade impacts the US economy?
Foreign trade has become more important to our economy in recent years. Only five percent of the world consumers live in the U.S. Therefore, if the U.S. only trade domestically, it will only have small share of potential customers in the world. International trade help diversify U.S. domestic economy. It helps the overall economy of the U.S. grow stronger. International trading also help small companies grow and become more competitive in the world market.

The study shows that international trade help the small business’s growth. Over two-thirds of exporters firms have over twenty employees. The majority of small and medium-sized international trading firms  only sell to one foreign market. If they can easily boost up their sales by increasing the number of countries they sell to. They are important because, the small and medium sized international trading firms made up almost ninety seven percent of U.S. exporters. But they only represent thirty percent of export value of U.S. products. They have strong potential in expanding.  The statistics show that the United State exports has increased from 224 billion to $1.1 trillion in the past twenty five years. Small and medium size international trading firms create new jobs in the United State.

An important policy tool that can assist Congress in assessing the value and the impact of trade agreements is represented by sophisticated models of the economy that are capable of simulating changes in economic conditions. These models are particularly helpful in estimating the effects of trade, in such sectors as agriculture and manufacturing where the barriers to trade are identifiable and subject to some quantifiable estimation. Barriers to trade in services, however, are proving to be more difficult to identify and, therefore, to quantify in an economic model. In addition, the...
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