Commitment to Local Economies Through International Trade Vital to Business

All economists agree that trade is a vital component in any economy, but the value of international trade to local economies is often overlooked because the benefits are often hidden. The dollar value of imports and exports are difficult to keep track of when the distribution system runs through so many stages. It can be hard to tell exactly what constitutes an import or an export when a product contains portions of both. Automobiles are an excellent example of this. In the United States, General Motors is generally viewed as an American automaker, but G.M. makes many of its cars overseas, and many of the components of the cars it assembles in the United States are fabricated in foreign countries. Honda, on the other hand, is seen as a Japanese automaker, but Honda assembles many of its cars in the United States, and even the cars it manufactures in Japan and brings into the United States contain many American-made components. The disruption caused by the Japanese earthquake and tsunami stopped production for many Japanese parts makers, but its effects were also felt by many local economies in the United States that were dependent on these materials. The supply chains of countless industries have become global, so even distant events can cause dislocation of local economies. Japanese automakers were forced to slow down their production lines when flooding in Thailand curtailed production of components needed to keep assembly lines moving. The economy of Yokohama suffered because of a weather event thousands of miles away. That is how critical international trade has become to business in any particular place. Countries willing to make a commitment to expand international trade are actually making a commitment to their local economies as well. Singapore provides proof of this. Virtually devoid of natural resources, Singapore enjoys one of the highest living standards in the world largely through its promotion of international trade. The one natural resource it does have is a deep-water port along heavily traveled sea-lanes. This makes it a convenient place to conduct international trade. What’s global, in effect, becomes local here. In the future, more and more countries will likely follow the Singapore model, owing to the stunning results such practices offer. Imports and exports may cease to be terms used to define products. Local economies will rely on production from around the world and market their goods in similar fashion.