International Trade in Goods
The Chapter focuses on specialization and trade. Use the internet to examine international trade across countries. Examine the Economic Report of the President. Click on the table for U.S. international trade in goods by area. Use the data in this table to create a bar graph showing trade between the United States and Canada, Japan, and Western Europe. Use one bar each to represent exports from the U.S. to each of the other countries and another bar for each import from the other countries to the U.S.
Use this graph to answer the following.
- Which country or region sells the most to the U.S.?
- Which country or region purchases the most from the U.S.?
- Why would industrial nations trade with each other? wouldn't they all have the same ability to specialize in hi-tech and high-skilled industries?
Solutions
- Based on information from The Economic Report of the President, 2007, Canada sells the most to the U.S.
- Based on information from The Economic Report of the President, 2007, Canada purchases the most from the U.S.
- Industrial countries will have different opportunity costs. Specialization and trade enable nations to acquire combinations of goods that lie beyond their own resource capabilities. The concept of comparative advantage applies to industrial nations as well as developing nations. Specialization according to comparative advantage followed by trade allows nations to acquire more of the goods they want.
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