Role Of Imports And Exports In California
Published 20 Feb 2017
The Columbian biological revolution has turned the ancient world, which lasted for centuries, upside down in the late 1490s and resulted in globalization 500 years later. The imports and exports of species, domestic animals, crops and cattle have established a long-term interrelationship between the Old and the New World. Yet, the imperialistic East, with its nationalistic, economic and religious motives, could not ever dream about the New World as the greatest threat for its economy, as the #1 importer and exporter of goods and services and the most developed country in the world. Today, the California’s and the U.S. economy as a whole has the most prominent, developed and stable position in the global market. The largest role in the California’s economy plays the foreign trade and grace to its ports – the key factor in export/import rate – the state had and still has the largest state product (GSP) level among the states.
The Unites States created favorable conditions for free trade and economic growth in every state. The agreements with Canada, Mexico that in future resulted in the North American Free Trade Agreement, state assistance laws, mutual trade relations with foreign markets paved the way for states’ economic development. Yet, California have turned out to be the leader among the states and the major exporter in high-tech and agricultural sector to 224 foreign markets. By virtue of California ports that are located in three districts – Los Angeles-Long Beach, Oakland-San Francisco and San Diego:
- Japan, the former IT competitor and manufacturer, plays the role of vendor and distributor through logistics channels today;
- California exports 70 percent of manufactured computers, electronics, aircraft and instruments to its key export markets: Japan, Canada, South Korea, China and Mexico;
- Eighteen states import goods from Asia;
- Agricultural exports amount more than $8 billion;
- 1 million of Californians have high-paid job related to trade and export, which makes California the first state in total high tech industry’s employment, the most populous state (36 million residents) with the largest labor force;
California gets the largest amount of Foreign Direct Investment.
It is not a final list of ports’ advantages; nevertheless, it gives a clear picture of their importance and influence of imports and exports in California that account one-fourth of the state’s economy, for they solve entry to and exit from the state issues, connecting the state to foreign destinations. Thus, as it was noted by the California’s Chamber of Commerce, “California is one of the 10 largest economies in the world (6th place) with a gross state product of over $1.5 trillion” (comparing to total Midwest GSP level of $ $2.2 trillion) (Trade Statistics, 2007). Foreign trade have expanded the California’s export role and brought advantage to the rest of the world.
Even the decrease in global economic activity was unable to affect the growing role of California’s export/import activity. According to the Trade Statistics, “California exports amounted to over $127 billion (or 12 percent)” out of the U.S. $1-trillion exports in 2006. As the top-rated U.S. exporter, California has gained a privilege to get the most of foreign direct investments. In 2003, “foreign investment (from the UK, Japan, Switzerland, Germany, France) in California was responsible for 4.5 percent of the state’s total private-industry employment [hence] foreign-controlled companies employed 561,000 workers […] the most of any state” (Ibid).
Advantageous climate plays the crucial role in agricultural sector and makes up the Golden State the top 10 exporter of products. In 2005 European Union, Canada, Japan, Mexico, China, South Korea, Taiwan, India, Australia, Turkey, Indonesia, Malaysia, Thailand, the United Arab Emirates and Philippines imported agricultural products of a total export value of almost $10 billion (California: Agricultural Exports, 2006). Almonds, cotton, wine, milk and cream, table grapes, orange, rice, tomatoes, raisins, walnuts and 40 other principal products of high quality were exported to 150 countries last year. The statistical data show that “in 1999, only 16 percent of local production was being shipped to foreign markets, whereas in 2005 this figure was 22 percent” (Ibid). And again we see that the core factor were California’s ports.
During the past 3 years, the California’s export value had been increasing, disregarding the drops in wheat, cottonseed oil, kiwi, figs, grapefruit, and avocadoes exports by 25 percent and more. As it is, top 10 principal products export value increased by 19 percent, along with 50 commodities’ increase by 15 percent, “the almond crop showed a 34 percent increase in export value in 2005″ (Ibid). So, the globalization, industrialization and IT development have not only enlightened different cultures and civilizations, but also made up benefits in agriculture – have eased the production process, decreased transportation costs and scope, provided a wide range of markets and, therefore, increased profit margin, farms’ success and future development.
The globalization effect and global competition had directly and indirectly sky-rocketed the California’s import of tourism, motion picture production, computer software and hardware, data processing, electronic equipment, textiles and other services. But, foreign trade and economic development has both negative and positive impacts:
Positive – jobs’ supply, high-paid work, business revenues, free foreign trade for reliable enterprises, market expansion.
Negative – decrease production rate at domestic level of other countries, leave no space for blue-collars and technicians, reduce private firms’ revenue and employment, imported goods and services may cause competition on the state’s local level, Foreign Investment may use this weapon to compete the U.S. market and economy.
As the fifth largest global consumer of energy, California imports 87 percent of its natural gas, 10 percent of ethanol, and almost 30 percent of crude oil, for the west coast terminal is unable to supply the amount needed to cover the California’s 2 percent of global consumption of natural gas, California’s crude oil production is declining The U.S. and Canadian sources will be depleted sooner or later, while the demand is still growing on and its long-term balance of supply/demand seems to be negative. While the rest of the world is enjoying the high tech and agricultural products that are exported from the state, California is forced to import natural resources.
The major issues that may reduce/increase the amount of foreign trade that goes through California are as follows:
- Global level of supply and demand;
- Domestic manufacturing/production;
- Currency exchange rate;
- Price, quality and quantity of products;
- Free trade agreements;
- Foreign and domestic competition.
Surely, none of the countries is protected from the disasters, epidemics, communication and IT gap, industrial and economic regress; but, the United States and California particularly have gained the reputation of economy that will remain competitive, disregarding terrorist actions, inflation, growing demand and decreasing supply of natural resources, and disasters. Californians are the part of the nation that stands firms in the face of hardships, takes the burden of other nations upon its shoulders and keeps fighting for the leading position on the global market in all spheres.
- Agricultural Export Data for California. “California: Agricultural Exports”. California Department of Food and Agriculture. 2006. 6 June, 2007.
- All about International Trade. “Trade Statistics”. California Chamber of Commerce. 2007.
- Kroll, C., Jaffee, D., Bardhan, A., Kirschenbaum, J., Howe, D. “Foreign Trade and California’s Economic Growth”. California Policy Seminar. Brief Series. June 1998. 6 June, 2007.