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Top five U.S. Trading Partners
The U.S. has strengthened relations with other countries around the world by offering foreign aid. In 2017, the top five U.S. trading partners all received foreign aid from the U.S., the world’s largest trading nation.

In 2013, U.S. exports in goods and services were $2.3 trillion. Trade is vital to the U.S. economy as it provides growth, aids jobs and offers Americans affordable goods and services. It supports families and businesses by allowing more productive and higher paying jobs, growing the variety of products available for purchase and encouraging investment for a more rapid economic growth.

The top five U.S. trading partners of 2017 received foreign aid, and then returned the favor by assisting the U.S. economy.

China

Aid received from the U.S. in 2017: $16 million.

China is the United States’ top trading partner with 130,000 exports and 505,000 imports in 2017. In 2015, Chinese manufacturing lowered prices in the U.S. for consumer goods which lowered inflation and in turn gave more money to Americans; as a result, consumer prices were 1 to 1.5 percent lower.

Though the percentage seems small, such actions make a significant impact throughout time. In 2015, the average income for a household was $56,500; trade with China saved these families up to $850 each in that year alone.

Canada and Mexico

Aid received from the U.S. in 2017: $28 million and $61 million.

Canada, Mexico and the United States are members of the North America Free Trade Agreement (NAFTA). Between 1993 and 2017, trade between the three countries quadrupled from $297 billion to $1.17 trillion. Specifically, the U.S. increased its exports of goods to Canada and Mexico from $142 billion to $525 billion.

NAFTA aids economic growth, profits and jobs for all three countries in its agreement.

Japan

Aid received from the U.S. in 2017: $30,000.

Japan benefits the U.S. by providing 710,000 American jobs via exports, and their benefits continue to grow as well. Japanese students that study abroad in the U.S. contribute at least $600 each to the U.S. economy; Japan also ranks fourth of countries to contribute to American tourism. In 2014, there were more than 9.4 million Japanese visitors who spent $17 billion in the U.S.

Germany

Aid received from the U.S. in 2017: $15,000.

Germany is the largest consumer market in the European Union (EU), and due to its success, the U.S. benefits from Germany through exports. Although U.S. investors may have to pay a higher cost while doing business in Germany, they can count on high levels of productivity, a highly skilled labor force, quality engineering, a first-class infrastructure and a prime location in the center of Europe. Germany also helps the U.S. through spreading their businesses overseas — companies such as BMW, Daimler, Siemens and Volkswagen have expanded operations in the U.S. which has resulted in more jobs.

Foreign aid is an important aspect of world operations because it strengthens economies and improves other countries’ ability to grow and build relations. The top five U.S. trading partners demonstrate the direct benefits that foreign aid can bring back to American soil.

– Anne-Marie Maher

Photo: Flickr

global economy is on the risePeople around the globe experienced the mania of the Dow Jones’ historic low in February 2018. Some traders even questioned if this was a sign of a global stock market crash. But as the U.S. stock market recovers from its volatile hijinks, global trade as a whole is rising, and rapidly. This rapid rise has many economists optimistic that the global economy is on the rise as well.

The global economy is driven by trade. As international trade rises, so do technological developments as nations tear down trade barriers. According to a report by the CPB Netherlands Bureau for Economics Policy Analysis, the volume of imports and exports grew by 4.5 percent in 2017. To gain perspective, this is a significant spike from a stagnant 1.5 percent rate of growth the previous year, which was the lowest since the global financial crisis in 2007-2008.

Globalization a Reason Why the Global Economy Is on the Rise

The world is changing. Globalization moves the market, just as we move through our interconnected culture of technology, digital communications and transportation. As markets evolve, global poverty is decreasing, while the global economy is on the rise.

Old business practices are being phased out, technology is replacing hard labor and workers are rising to higher levels of efficiency. Automation is shifting the way goods and services are distributed, easing mass production.

Nations have outsourced businesses to developing nations, partly to reduce wage costs. Yet, business process outsourcing provides an oasis of income for people in developing countries such as India, the Philippines and Malaysia. In many places, this opportunity to earn a living would not be possible without outsourcing.

As technology advances, the market shifts and standards of living rise across the globe. Developing countries who have broken trade barriers have developed competitive advantages in the production of certain products. Ukraine, for example, is known as the breadbasket for its richness in wheat and farmland. Venezuela is known for its vast oil supply and China’s factories are known for producing more than half of the world’s clothing.

Tariff Reduction Has a History of Success in Developing Countries

History reveals that nations who open their economies to trade with the global economy experience faster growth and poverty reduction. During the past 30 years, global poverty has been cut in half. Studies show that developing countries that lowered tariffs in the 1980s experienced quicker economic growth in the 1990s compared to those that did not. Tariffs, or taxes on imports and exports between sovereign states, are often viewed as barriers affecting the global economy.

Developing nations have tariffs that are three to four times higher than industrial countries, and they are even higher on agriculture. Average tariff protection in agriculture is about nine times higher than in manufacturing. This can undermine a developing country’s agricultural sector and exports by depressing world prices.

The outlook for the global economy depends on these countries tearing down trade barriers. Yet, political decisions in developed countries are affected by trade barriers as well. In Venezuela’s case, the U.S. has imposed investor-related sanctions on Venezuelan oil to pressure its government to address its humanitarian crisis of inflation and starvation. According to Reuters, U.S. officials are not ruling out a complete ban on Venezuelan oil in order to send a strong message to its dictator, Nicolás Maduro.

Trade Wars Are Common and May Not Affect Global Trend

China’s trade practices have also affected U.S. trade on a political level. Elon Musk, the CEO of Tesla, recently called on U.S. President Trump for equal and fair rules for cars, citing China’s pressure on foreign businesses to partner with Chinese carmakers before manufacturing in China. Musk noted China’s 25 percent import duty on cars compared to America’s 2.5 percent duty. President Trump proposed a sweeping tariff on steel and aluminum on March 8, 2018, which characterizes the trade wars.

Skeptics believe this political decision could take the global economy down the rabbit hole. Others are bracing for a global crash for different reasons. “I still believe that we’ll face a financial crisis within the next two years if we don’t solve the debt problems,” said Bjorn Ritschewald, a civil engineer with the government Road and Traffic office in Bremen, Germany, a city popular for its maritime trade. “Almost every country spends more than its income. Actually, I don’t know any country that spends less than what it takes in.”

“Waves in trade flow are common, but it depends on the goods,” Ritschewald told The Borgen Project. “You can’t just look at the financial numbers. You also have to look at the real amount of goods and which kind of goods are being sold.” World markets experienced the rippling effects of the Dow Jones’ plunge. The plunge is characterized as market correction, a phenomenon where unusual market success sparks panicked selling, driving market drops across the globe.

On the other hand, many economists believe that the global economy is on the rise. Their confidence stems from positive trade initiatives such as the Trans-Pacific Partnership, a free trade agreement set to be signed by 11 countries in March. The trade wars and other trade barriers are pitfalls that affect the global economy. However, with trade growth booming, there is much optimism in the air about a healthy global economy in the future.

– Alex Galante

Photo: Google

z1 Borgen Project
In Africa, there are many foreign corporations investing in and fueling industry, many of which are part of extractive industries that may not be economically beneficial for the continent in the long run. A company that stands apart from this ilk is Unilever.

Unilever is a British-Dutch multinational consumer goods corporation whose products reach 2 billion consumers in over 190 countries, making it one of the world’s top 500 largest corporations. Unilever has been in Africa for over a century and produces annual sales there of more than $5 billion, employing 40,000 people on the continent in offices and building factories in 40 locations.

This megalithic corporation has built an impressive reputation for itself. FORTUNE Magazine consistently recognizes Unilever among the World’s Most Admired Consumer Food Product Companies and in 2013 recognized Unilever as a Top 50 World’s Most Admired Company. Much of this admiration stems from the numerous gender diversity and environmental sustainability awards Unilever has garnered over the years.

Despite these accolades, criticisms are aplenty and certain truths are unavoidable. For example, Unilever’s biggest purchases are palm oil, soya, paper and beef. These are commodities whose global trade is responsible for 50 percent of global tropical deforestation, admitted Gavin Nearth, senior vice president of sustainability at Unilever.

Significantly, these criticisms are not necessarily thrown in a dark corner at Unilever with the hope that they will wither and die. There is an acknowledgement that the vast corporation’s practices have enormous environmental and social impacts that have not been, and still are not in many instances, sustainable.

Yet things do seem to be changing. In 2009, Paul Polman, previously an executive at Nestle and before, Proctor & Gamble, became Chief Operating Officer of Unilever. Within a year he introduced the Unilever Sustainable Living Plan, a series of goals that aim to transform the company by doubling its size while increasing its positive social impact and reducing its environmental footprint by 50 percent. Despite the worry of many stockholders, according to Financial Times, Mr. Polman believes that these goals are necessary to maintain a “license to operate” in an age of public scrutiny.

Increasing social impact includes increasing workplace rights, ensuring that women get a fair deal and improving health and well-being for more than 1 billion people. Reduction of Unilever’s environmental footprint entails ensuring that their products and supply chain meet environmental requirements covering everything from forest protection to pest control. The impact of working toward these goals will manifest in Unilever’s sizable African operation.

Furthermore, Unilever’s business model in Africa impacts the African poor. According to Frank Braeken, Unilever Executive Vice President for Africa, “There is a growing realization that the future of Africa is based around a consumer rather than mining. This is a consumer that has been under-served and over-charged.” For Mr. Braekan, there are hundreds of millions of untouched consumers, most of whom are low-income, known as bottom of the pyramid (BOP), consumers.

A method through which Unilever reaches BOP consumers is low unit packs (LUPs). These are small consumer goods, worth as little as half a cent. Small shop owners buy goods from Unilever companies in large packs and resell them in smaller portions.

LUPs is just one method by which Unilever plans to meet Africa’s poor and their needs. In conjunction with its vast operations on the continent and increasingly sustainable business model, Unilever will be able to be quite the developing force in Africa.

– Connor Bohannan

Sources: BDlive, Financial Times, How We Made It in Africa, Telegraph, Unilever
Photo: Telegraph

black_gold_coffee_ethiopia
The coffee farmers of Ethiopia are told that their coffee is gold. “If our coffee is gold,” the farmers ask, “then why do we get nothing?” Two billion cups of coffee are consumed every day around the world. Coffee beans are grown in poorer, developing nations and then shipped off to the West for consumption. The price of a cup of coffee is $0.12 in Ethiopia, while a cup in a Western country costs up to $2.90.

Four major multinational corporations dominate the world market: Kraft, Nestle, Proctor & Gamble and Sara Lee. Until 1989, an International Coffee Agreement regulated the supply of coffee on the world market. Now, the international price of coffee is established in the New York and London Stock Exchange, where coffee is the second most actively traded commodity.

Black Gold is a documentary about Ethiopian coffee farmers’ struggle to seek higher prices for their coffee beans. Ethiopia is the largest producer of coffee in Africa, with over 15 million individuals depending upon coffee farming and production for survival. Coffee makes up 67 percent of export revenue in Ethiopia.

Tadesse Meskela manages the Oromia Coffee Farmer’s Co-operative Union, which represents 74,000 coffee farmers. Through their union, they are cutting out the middlemen in the chain of coffee production. Not only do the farmers grow the coffee beans, they also roast the beans themselves.

These farmers and their families depend on the coffee beans to survive. These people are born into coffee-growing families and communities and they have little chance to escape. They are forced to become coffee farmers and to remain stuck in poverty.

The coffee beans create a single production economy, making the economy extremely dependent upon Western companies and consumers. These coffee farmers in Ethiopia do not receive subsidies from their governments. Slight fluctuations in price will greatly affect the local farmers.

There are many various interlinked factors that have created these unequal global trade relations. Many of them have links to colonial and post-colonial relationships. Through social, economic and political policies Western nations have forced developing nations to remain dependent upon them for survival.

In international organizations such as the World Trade Organization (WTO) developing nations are not able to have their voices and problems heard. The WTO sets rules of global trade, but is dominated by the larger, richer developed countries. These negotiations take place behind closed doors and the smaller delegations have been losing.

Consumer awareness of the farmers’ conditions is vital. While large multinational corporations and middlemen are benefiting from coffee production, the farmers themselves get almost nothing. Consumers need to be aware and ask for fair trade products. Fair trade coffee beans are labeled and available at most grocery stores.

In this age of increased globalization, it is important to be aware of how we are impacting the lives of other people, and how we are impacting the planet. When we go to Starbucks, and buy that cup of steaming coffee, we do not see the human lives that have been put into that cup. We do not see the coffee bean farmers praying for the weather to be kind. We do not see the women who pick the coffee beans for less than 50 cents a day. We do not see their children who go hungry. We only see the coffee in our cup and we are satisfied.

– Sarah Yan

Sources: Black Gold Film,The New York Times
Photo: Universal Cargo

Developing_Countries_Domestic_Trade_Spices_India
Before the global economic crisis of 2008, developing nations experienced tremendous growth due to an ever-increasing consumer demand in developed nations. With the recession of 2008, it was seen that this reliance on exports to fuel the economies of developing nations was an unstable and unsustainable one, vulnerable to the economic contractions of other nations.

Recently, the United Nations Conference on Trade and Development (UNCTAD) published its annual trade and development report detailing the need for shifts in the economic paradigm of many developing nations. An exports-driven economy is not fiscally sustainable, and the Great Recession has shown devastating impacts on economies that have been dependent on primarily exports for growth.

When growth is stifled in developed countries, such as the United States, there is not much growth in global trade. Consequently, those developing nations that have been highly dependent on exporting to developed consumer nations suffer during economically unstable periods, when worldwide trade and demand rapidly decelerate.

The next step for developing nations is to establish economics that are not based on the unsustainable global demand of developed nations, economics that promote domestic industry and investment. While exporting does develop a profitable avenue through which to sell goods, nations that depend so heavily on exports suffer greatly when there are declines in worldwide demand. Countries like South Africa are best off, according to UNCTAD, to concentrate on trade and consumption within its own borders if it wants to maintain growth.

If developing nations concentrate on increasing domestic demand and stimulating growth, they create additional markets and partners, other developing nations, with which to trade. Thus, economies based on furthering both domestic demand, as well as focusing on promoting sustainable export-based economic media, are the most viable.

An economy that is experiencing increases in demand inside its borders would promote foreign investment from industries in developed nations, leading to economic growth that is sustainable. Foreign investments would improve the lack of technological and technical resources in Albania and would relieve this country from the dependence it has on outside consumers by jumpstarting domestic industries.

The bigger the bank, the harder it is to regulate it. This is why the report by UNCTAD also encourages a focus on improving networks of the regional and state-run sources of investment and finance over maintaining a reliance on large, indiscriminate international institutions. If the central banks of Albania are strengthened, then a more secure credit policy accompanies them. If the financial institutions of a nation are weak, then the economy of the nation is dangerously connected to the fluxes of the international banking institutions, many of which simply cannot adapt and be applied to the specialized markets of countries like Albania.

Development that is based primarily on exports cannot be maintained indefinitely. In order to boost the economies of developing nations, export-oriented economies are unfeasible because there simply is not the same consumer demand there used to be before the worldwide economic downturn. In today’s economic landscape, a balance is needed.

– Rahul Shah

Sources: BDLive, The Guardian, UNCTAD
Photo: Blogspot