International Trade and Us Economy

TOPIC OF THE model TRADE IN INFORMATION TECHNOLOGY AND US ECONOMIC evolution INTRODUCTION The assignment is about the case where the organizations in the US were trusty for the development and cash advance of information engineering which as well as included the innovation of Mainframe and Midrange estimators in the era of 1960s and 1970s. Companies much(prenominal) as IBM and dingle were one of the first companies which led to advancement of information technology.However, with the high cost of exposeion in US regarding the harvestion of basic components, such(prenominal) were and so seawardd to foreign companies. PROBLEMS AND SOLUTIONS 1. During the 1990s and 2000s computer hardw atomic number 18 companies in certain authentic unharmed grounds progressively moved the production of hardware components offshore, often outsourcing them to producers in maturation nations. What does world-wide trade theory suggest about the moments of this movement for frugal re turn in those develop nations? SOLUTION INTRODUCTIONThe theory illustrates that substantial nations despite having resources to produce, bear pursued in buying the commodities from the foreign manufacturers. This is because of the impression cost of importing rather than producing such components. The theory may be described as Comparative receipts Theory. Such theory states the dexterity of a nation to produce goods at a lower fortune cost than separate(a) nation. The true countries were only focusing on producing on high cherish added components whereas create nations were improvising on manufacturing basic hardware components.The get of these diametrical components were being met by each nation and hence the international trade commencement to meet the necessitates were utilized by such nations. IMPLICATIONS The unquestionable nations by practicing the outsource methodology for production of basic hardware goodness benefited it for umpteen different reasons. Su ch reasons are as follows * The internal resources which could have been utilized at exorbitant costs can be curtailed and such resources could be used for alternative purposes.This would mean that the factors of production shall be purchasable for other developments and advancement. * The decrease in cost of a final product would result in increase in the sales volume of such product as demand go out increase. This increase in demand would result in an increase in the sum of a goodness therefore, to a greater extent r eventideue shall be generated for the judicature. * An increase in the everyplaceseas supply of a final product would implicate a favorable remnant of trade.This shows that exports shall increase over imports during a period. * Productivity of a major patience in regard to an increase in sales will finish up the economic development of a nation by enhancing its Gross domestic help Product (gross domestic product). This kernel if information technology pati ence of a nation improves then the contribution to the GDP of a developed nation shall also enhances. * Development in an industry promotes the job opportunities of developed nations.This means that with the advancement of information technology sector came with a high demand of tie in jobs such as computer package engineers and other kinds of computer establish services. With this unemployment also minify and turn up a considerable contribution to the parsimony. coda With the outsourcing of production of basic commodities to developing nations in the era of 1990s and 2000s, developed nations were greatly benefited by both time and cost to allow them to produce even more technical commodities and exert their skills on advancing in the information technology sector.Currently such companies kindred Dell, Intel, orchard apple tree etc. are generating even more new products into the world marketplace of information technology and simultaneously contributing to the thrift of the ir respective nations. 2. IS THE EXPERIENCE OF THE UNITED STATES, AS DESCRIBED IN THE CASE CONSISTENT WITH THE PREDICTIONS OF INTERNATIONAL TRADE surmise? SOLUTION INTRODUCTION Computer companies in the United States like Dell, Intel, Apple etc. have been manufacturing computers in the late 1970s.However, during the early 1980s, such companies refractory to offshore production of basic components like dynamic random gateway memory chips (DRAMs) to Japan and other countries manufacturers, yet they kept the production of the highest value added components such as microprocessors to themselves and the final assembly. This trend implicates that US companies were producing the final product and in the light of international trade, demand for such computers was also change magnitude momentarily by other nations.Also, US was also advancing in other industries which started to utilize IT based products. Altogether, productivity expansion was shown in the US economy. ADVERSE IMPACT ON TH E US ECONOMY Ricardos brain wave on comparative advantage theory stated that all countries move up out ahead when they trade with each other because if a developed nation like the US trade more with a developing nation like Japan with each country specializing in different products then they have a relative advantage.But this effect had an adverse implication on the job losses in US. By the continuation of globalization, many of the US colour collar jobs were at stake. This is because of the production shifting to offshore countries like Japan, china, India, etc. A census by Harvard University labor economic expert showed that every 1% drop in employment due to imports or factories gone outsourced curtails about 0. 5% off pay for remaining workers. And if white collar outsourcing expands, the concluding job losses could cutoff a wide swath of US consumers.As there is minor doubt that globalization will relatively break in and would cause close to 14. 5 one thousand thousand wo rkforce loss and more than half the US workforce of around 130 million could feel the blow. DEVELOPMENTS IN THE US INDUSTRIES many another(prenominal) economists sight that the new offshoring is an accumulated advantage. For one thing, bosses cost savings should be more than enough to uphold for any remuneration loss seismic disturbance. By the reduced prices of software and other goods outsourcing could enlighten a new cause of US productivity increments.This is agreed to say that surely that developing countries like Japan, China etc. will specialize in producing IT commodities and are obtaining jobs in IT cogitate services, but US will still outrun them in areas like drug research or nanotechnology which the developing countries are not even close to achieving. Thus US will have space, technology and other resources to work on the developments of new and technical industries. PRODUCTIVITY GROWTH IN THE US ECONOMY Globalization of IT hardware production also created an impact on IT services and software.With the decrease in the prices of both hardware and software from 10 to 30 percent, these lower prices led into higher productivity egression and an accumulated $230 billion in additional Gross Domestic Product. Many other industries also started to use computers in their businesses which shown 2. 8% percent growth in the productivity of their sales and profits. 3. WHAT ARE THE IMPLICATIONS OF THE THEORY AND DATA FOR a) presidential term POLICY IN ADVANCED NATIONS SUCH AS THE UNITED STATES, AND b) THE scheme OF A FIRM IN THE COMPUTER INDUSTRY, SUCH AS dingle OR APPLE COMPUTER?SOLUTION INTRODUCTION Comparative Advantage Theory states that countries should specialize in economic activities in which they have a comparative advantage and trade with others. The government policies should also revert on focusing on that specific area which the country specialize. a) United States government on realizing the productivity growth in information technology tre nd, promoted the IT cogitate industries on importing basic commodities such as DRAMs and other PC components and by the end of 1990s, IT developed so much so that GDP raised to $230 billion.The US government was mastering in information technology very early. In 1990s, it issued an docket to articulate and implement a great deal for a national information infrastructure (NII). This initiative was widely praised at the time as a forward looking technology insurance initiative that would simultaneously promote economic growth, improve the lives of citizens, and allow governments to come through better services and information to the public- all without new expenditures by the government.The agenda embraced information technology as an enabling and indeed as transformative means for achieving a broad range of economic, social and political goals. The agenda characterized the US as having become primarily in information based economy and asserted a bright future for computer industr ies and other tie in IT industries. b) During the heyday of the technology boom throughout the 1990s many companies see enormous success for a few years, however without creating a solid internal framework many of these companies did not survive.An exception to that business trend is dell, which was able to address its problems associated with rapid growth and build itself into a haunting profitable company. Dell in later 1990s manufactured PCs which no one else could think of, it was specializing in producing tailor made computers for users all over the world. Because of advancing in technical fields and continuing research, Dell proved to be one of the market leaders in computer industry and accounted for much market share in the overall world market of computer industry.After the era of 1980s, advanced companies in the US computer industries were in business to make a profit and do well for other stakeholders such as investors. Because of this notion, many industries to offsho re white collar jobs to developing countries like Japan, India, etc. Many of the economists argued that the loss of white collar jobs was only if a manifestation of companies viewing the world as a borderless market- where they desire resources wheresoever they are cheapest, produce in the optimal location, and sell wherever there is demand. CONCLUSIONUSA being the pioneer of Information Technology, developed most of the gadgets that we use today and have provided an ease of access to the computer industry. Despite the job losses after the offshoring process in the US itself, it provided a gain for other developing countries like Japan, China, India and many others. The aggregate aim for the US companies was to maximize profits and expand production to oversea markets to enhance profits and sales. In the end still US economy in the IT related industry tops out in compare to the rest of the world.