The trade balance is the difference between total values of a country’s exports and imports at a particular year. Therefore, the trade balance for a given nation can be described in terms of trade deficit or surplus. As at May 2011, the trade deficit was $50.2 billion. However, the current deficit in terms of goods and services was $566 billion in the year 2017. The exports were $2.329 trillion while imports were at $2.895 trillion. The trade deficit means that imports to the United States are more compared to the export value in terms of goods and services. On the other hand, this means that the United States of America gains less in terms of monetary value from the international trade.
According to economic terms and notions, I think it is not a good idea for sustaining a trade deficit in the economic world. Therefore, for a continuity of economy and also an equitable distribution of money, I find setting the economy at a place where there is more flow of money inside the country to be more persuasive. So to say, this can be achieved by having more exports where the Country sells its goods and services to the global world and receive money in exchange.
Definitely, the answer above will change for various countries because of the nature of their economy. Japan as a Country does much of exports of their finished goods to the world as compared to the imports from other countries. This means that the resultant trade balance will be a surplus. The United States of America does more of imports than exports leading to a trade deficit. On the other hand, Peru the existence of trade deficit in the economy will aid in maintaining the flow of money out of its economy since it requires a lot of resources from other nations to acquire what they cannot produce locally.
The relationship between the trade deficit and potential for financial crises is that a large trade deficit creates an environment that is conducive to the financial crises that could possibly damage the economy of a nation. This means that too much trade deficit can result in a financial crisis in a given nation. For example, a growing trade deficit in the US can lead to a financial crisis.
A trade deficit can have positive economic effects as it avails more job opportunities to the citizens especially developing nations. Moreover, trade deficit represents a sacrifice for the future growth and development. Perhaps, the size and strength of economy assist determine the level of trade deficit will be beneficial and how it will trigger an economic crisis.
For the past 20 years, the dominant trend in the US was the decline of manufacturing and also the rise of high technology and service sectors. The United States of America had a shift in production region due to the low wages that are available in developing nations with a good high technology production which are later taken to the United States. The American workers with a lower degree of skills have been hit by foreign imports of goods and plant closings since they were unable to acquire jobs in the high-tech manufacturing industries and service sector. On the other hand, a high degree skilled worker was able to acquire jobs at the available industries within the Country because of the level of competition demanding qualified workers for the job positions. Most of the workers with manufacturing foundation lack the training and skills necessary for the transition to the new field.
The United States federal government has established and sponsored programs that were designed to assist the American workers who were displaced by the economic shift to obtain new and relevant skills. For example, programs such as Trade Adjustment assistance that is controlled by the US Department of labor. Therefore, to assist the worker’s, the government should place some policies to protect the rights of every worker by every organization making sure that their workers are involved in the transition process. At the federal level, the government should create a policy for protecting the workers to the state government. At the state level, the government should support the initiative and policy for protecting the rights of the workers in the economy. On the other hand, at a local level, the government should implement the policies for worker’s protection and also economic stability.
In the schools and universities, I have noticed a shift in digital transformation as the schools develop and embrace new technologies such as the use of eLearning. Because of this, there have been online classes that were not possible some decades ago in the US. The current hiring sectors for students have been diverted due to the change in the economy. The digital companies have been the one hiring most students today in the economy. This means that most of the Companies are actually digitalized as compared to before where technology was absent. Therefore, it is the students from the universities and other technical schools who have the skills that match the new fields in the economy. Reference