Team Project International Trade in Thesis

Balance of trade is being more impacted by currency re-valuations in China, the declining value of the British pound and the reconsideration of indexing the Euro (Altman, 2009). What emerges as a result of these conditions that the decision on the part of the G-20, or ministers and central bank governors of the world's largest economies is to continually increase the International Monetary Fund (IMF) over time (Altman, 2009). This is going to have an immediate effect of increasing inflation globally and also fuel more of an unstable region in Pakistan and Afghanistan (Altman, 2009). Never before has the balance of trade had direct implications on the relative political stability of nations as they do today (Altman, 2009). This tight link of international trade and political stability is projected to become more prevalent through African nations whose economies were just beginning to gains stability as well. In summary, the current global economic crisis has shown that the dependency of political stabilities of nations is directly related to the stability of the balance of trade.

How International Trade Affects the Standard of Living

The contraction in consumer spending as a result of the decrease in international trade has had an immediate impact on the standard of living in the U.S. Altman (2009) notes that international trade has been one of the primary determinants in driving down discretionary spending and driving up savings rates of American consumers (Altman, 2009) which has had a positive effect on stabilizing the economy and holding down inflation.Yet the international trade's affects of magnifying and making more acute the subprime mortgage crisis has acted as an accelerator of foreclosures and drastic re-ordering of the financial services industry across all nations, hitting the American companies particularly hard. Just as the Balance of Trade has had significant effects on the political stabilities of nations, international trade has a direct impact on the standard of living across all nations. The American economy is driven primary by consumer spending, and when international trade shifts rapidly between nations, it has an immediate effect on consumption. The fact that Americans are reluctant to purchase durable goods today is evidence of how quickly international trade can influence the standard of living in this country and many others.

References

Altman, R. (2009). Globalization in Retreat. Foreign Affairs, 88(4), 2-0_5.

Globalization in Retreat

Roger C. Altman. Foreign Affairs. New York: Jul/Aug 2009. Vol. 88, Iss. 4; pg. 2

Abstract (Summary)

The era of free-market capitalism and deregulation is over. As the popularity of the U.S. economic model is waning, China's influence is growing. To.....