Jordan-USA free trade agreement Essay Example | Topics and Well Written Essays - 2500 words

Jordan-USA free trade agreement - Essay Example Moreover, its location amongst other developing nations further restricts its potential for growth (Chomo, 2006). These factors increase the need to sign trade agreements with more developed countries. Trade agreements may involve two countries reducing tariffs on each other’s goods or reducing bureaucracy by simplifying the procedures on import and exports (Miller, 2004). Relatively speaking, Jordan is small for a country that has undergone considerable processes aiming towards opening up the economy. This makes a good example of developing nations that have employed successful economic strategies. An example of a major process undergone by Jordan would be significantly lowering its trade barriers to entry by signing the Free trade Agreements (FTAs) with countries such the United States and the European Union (EU). This was also accomplished by its concurrence to the World Trade Organization (WTO) (Busse & Groning, 2012). Ultimately, the trade barriers are expected to result in an increase in trade flow as both production and consumption improve in efficiency. The benefits of signing the FTA with the U.S. does not stop at increasing trade flow, but it also attracts investment in the export sectors by improving domestic competition and productivity which could only result in substantial economic development. By a developing nation signing a trade agreement with an economy that is industrialized, it gains improved access to markets for those products that match the developing nation’s relative factor-abundance compared with the industrialized trading partner (Maria,2000). Supposedly, a small developing country should not loose its industrial base by signing a FTA with a nation that is industrialized. Both the U.S.-Jordan FTA and the North American Free Trade Agreement (NAFTA) gave concessions to developing country members like Mexico and Jordan. Chomo (2006) found out that it caused the developing nations to become reliant on the custom duties as t he major source of tax revenue. The U.S.-Jordan FTA addressed the aforementioned issue by allowing special concession on the Jordanian tariffs on automobiles. Indeed, Jordan’s imports and exports have considerably increased since the commencement of the liberalization process. The expansion of the imported goods has been larger in as compared to the rise in exports leading to substantial increase in its trade deficits. According to Busse and Groning (2012) are of the opinion that whilst in 2007 Jordan has small deficits in its account of US $68 million, it had a surplus of US $ 2,779 in its current transfers and US $835 million in its income account. In 2007, the nation faced a deficit of US $2,776 in its current account. Irrespective of the growing importance of services, almost all of Jordan’s accession to the U.S.-Jordan FTA has majorly focused on trade liberalization in goods only. Jordan adopted the Investment Promotion Law in 1995 which offered non-discriminatory treatment to the foreign investors (Chomo, 2006). Additionally, certain locations such as the Aqaba Special Economic Zones were designated for investment. In 1997, it revived the 1981 Agreement for Facilitation and Promotion of Trade which was signed by the members of the Arab league which Jordan is member (Malkawi, 2008). When the agreement went into full force in 1998, it foresaw a yearly reduction in tariffs of 10 % thereafter in 2008 reducing the tariffs to zero. Moreover, this agreement allowed for Jordan to cooperate with the neighboring on both

Offshoring Creates More U.S. Jobs Than It Kills Research Paper

Offshoring Creates More U.S. Jobs Than It Kills - Research Paper Example In an event that a firm relocates its relatively inefficient production parts abroad, where they can be more cheaply produced, it can be able to expand its output through the stages that it has comparative advantage. As a product, the average productivity of the remaining employees increases due to the change in the workforce composition. In addition, structural changes that boost the remaining workers’ productivity are also likely. These benefits emerge due to offshoring service or material inputs because of the access to new varieties of input (McCarthy 70). Offshoring of businesses abroad by United States firms enhances the likelihood of more benefits that can lead to job creation locally. Offshoring service inputs such as information and computing services from other local firms is more likely to enhance the prospects of job creation in the country. The impacts of material and service offshoring on productivity translate into job creation locally (Wei and Amiti 4). This is because offshoring could lead to higher labor demand due to scale effects. Due to higher productivity, lower prices will be reduced and therefore enhancing competitiveness of the United States companies. The effect of this outcome is that US firms will be able to expand and create more jobs abroad and more importantly locally due to the rise in demand of their goods (Wei and Amiti 4). High productivity companies are more likely to engage in global production strategies that could help reverse the jobs lost locally. Offshoring tends to boost productivity and reduce costs, thus prompting firms to expand domestic hiring to offset the lost jobs to overseas workers. Several studies have established that offshoring has no impact on native... The above discussion clearly supports the argument that offshoring creates more jobs in the United States rather than killing job creation. It points to the reality that while offshoring may be a painful endeavor particularly in the short run, it is a necessary occurrence for long-term benefits. As has been noted, offshoring helps to create jobs through various aspects such as enhanced productivity, reduced cost of production and boosting national economy among other ways. This report makes a conclusion that the realities of globalization and other developments around the world inform the need for American companies to engage in offshoring as a means of not only remaining competitive, but also of improving the United States overall economy. American companies, like other companies in the world, have to adjust to new realities in the world. They should, on one hand support real global competition, and on the other hand, support local workers and national companies. Offshoring provides this unique opportunity for these companies to achieve this goal. Offshoring prompts American firms to do broad adjustments in attitudes and knowledge regarding changes in the global economy in order to reach the right balance of policies that promote the ideal long-term global competition, and adopts near term measures that counter policies that threaten creation of jobs domestically. Strategies adopted by American firms should protect domestic workers, but at the same ti me ensure that it boost national economy in order to increase job opportunities among the national population (Heineman para16). This will also be important in enabling the United States workers to engage and pursue higher-level jobs.