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November 1994, Vol. 117, No. 11
Foreign trade alternatives for employment and occupations, 2005
Betty W. Su and Carl A. Chentrens
As the world turns increasingly into a global marketplace, the issue of foreign trade becomes more complex. U.S. trade with China has grown rapidly in recent years. New markets in Eastern Europe and in the former Republics of the Soviet Union are emerging. Perhaps the most important element on the trade horizon is the recently negotiated GATT (General Agreement on Tariffs and Trade) and the lately ratified NAFTA (North American Free Trade Agreement) among the United States, Canada, and Mexico.1 Globalization of trade is an ongoing process that may be hastened or slowed, but chances are that it will not be stopped. The corning decade will likely see some major changes in the way products are produced and delivered to the consuming sector of the world economy.
The BLS projections of the U.S. economy to 2005, described in the November 1993 issue of the Monthly Labor Review,2 offer three alliterative views of potential growth to provide a range of future paths for final demand and employment. However, because those alternatives address only a few of the unknowns of the coming 13 years, special scenarios have been prepared which explore other areas of uncertainty in our economy.3 This article focuses on the area of foreign trade, presenting an evaluation of the potential employment impacts of different levels of demand in this area.
To assess the impact of a U.S. economy which may be more or less competitive in world markets, the analysis of foreign trade presented here focuses primarily on the impacts on employment due to changes in exports and imports. The trade alternatives presented here do not attempt to portray the effects of any particular policy or trade agreement such as NAFTA. Rather, they are prepared to evaluate the sensitivity of the economy to changes in foreign trade. Exports and imports are both important components of our economy and are projected to become even more important between now and 2005. Because exports and imports tend to balance in the long run, their employment impacts at the aggregate level generally balance out except in terms of relative differences in the productivity of the industries affected. However, some industries are sensitive to trade growth. This analysis demonstrates that the shifting structure of the global economy brings prospective employment changes in many industries, some closely associated with foreign trade and others not normally so associated.
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1 Many studies have examined the potential impact on the U.S. economy of the North American Free-Trade Agreement. For the most recent work, see "Agriculture in a North American Free-Trade Agreement," Foreign Agricultural Economic Report no. 246 (U.S. Department of Agriculture, September 1992); "North American Free-Trade Agreement: America's Competitive Future, Business America (U.S. Department of Commerce), Oct. 19, 1992; "U.S.-Mexico Trade: Pulling Together or Pulling Apart?" (U.S. Congress, Office of Technology Assessment, October 1992); "The Employment Effects of the North American Free-Trade Agreement: Recommendations and Background Studies, Special Report no.33 (National Commission for Employment Policy, October 1992); "Potential Impact on the U.S. Economy and Selected Industries of the North American Free-Trade Agreement,"USITC publication no 2596 (U.S. International Trade Commission, January 1993; the following publications of the U.S. Congress, Congressional Budget Office: "Estimating the Effects of NAFTA: An Assessment of the Economic Models and Other Empirical Studies (June 1993), and "A Budgetary and Economic Analysis of the North American Free-Trade Agreement" (July 1993); and William R. White, "The Implications of the FTA and NAFTA for Canada and Mexico," Technical Report no. 70 (Bank of Canada, August 1994).
2 A series of five articles, entitled "The American work force, 1992-2005," appeared in the Monthly Labor Review in November 1993.
3 See Janet Pfleeger and Barbara Wallace, "Health acre alternatives: employment and occupations in 2005," Monthly Labor Review, April 1994, pp. 29-37; and Arthur J. Andreassen and Jay M. Berman, "Infrastructure alternatives for 2005: employment and occupations," on pp. 22-28 of the same issue.
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