Problem
• The US Office of the Trade Representative, which is the arm of the government that helps negotiate trade agreements and settle trade disputes with other countries, provides the following statement on the benefits of trade to the US economy:
"The United States is the world's largest economy and the largest exporter and importer of goods and services. Trade is critical to America's prosperity - fueling economic growth, supporting good jobs at home, raising living standards and helping Americans provide for their families with affordable goods and services.
In 2017, the U.S. was the world's largest goods and services trading nation, with exports of goods and services totaling $2.35 trillion.
1. U.S. goods and services trade (exports plus imports) totaled $5.3 trillion during 2017, up 6.5% ($321 billion) from 2016, and up 31% from 2007. U.S. goods trade totaled $3.9 trillion and U.S. services trade totaled $1.3 trillion.
2. Agricultural goods accounted for $264 billion in total (two way) U.S. trade during 2017. Exports were $143 billion; Imports $121 billion; and the trade surplus was $22 billion.
3. Manufacturing (a subcategory of goods trade) accounted for $3.3 trillion in total (two way) U.S. trade during 2017, up 5.3% from 2016, and up 24% from 2007.
4. Services accounted for $1.3 trillion in total (two way) U.S. trade during 2017, up 5.6% from 2016, and up 56% from 2007. The United States is the largest services trading country in the world.
Trade expansion benefits families and businesses by:
1. Supporting more productive, higher paying jobs in our export sectors
2. Expanding the variety of products for purchase by consumers and business
3. Encouraging investment and more rapid economic growth
Trade keeps our economy open, dynamic, and competitive, and helps ensure that America continues to be the best place in the world to do business."
• In what ways are benefits from trade in this statement consistent with the benefits from trade under the Heckscher-Ohlin trade theory?
• In what ways are benefits from trade in this statement consistent with the benefits from trade under new trade theory?