Surplus And Deficit In The Trade Balance

Surplus and deficit in the trade balance

Introduction

The essential objective of this work is to demonstrate that the commercial surplus in favor of Mexico that is presented with the United States is a myth. Commercial balance is the balance of the differences between the exports and imports of a country, for a certain period of time and measured in the currency of that economy, in other words the balance of the trade balance is the difference between the value of the goodsthat a country sells abroad and those that buy other countries.

Developing

When the difference is positive that there is a surplus or surplus in the trade balance, or otherwise there is a deficit. In general terms, every country seeks that its trade balance throws surpluses for long periods, since this is seen as a symbol of prosperity and development. Nations with commercial surpluses have certain competitive advantages: for example, they can use those surplus reservations to invest or buy bonds from other countries. Public debt acquisition gives the buyer country a certain political and economic influence on the other country.  

In addition, commercial surpluses can be used to invest in machinery and improving export capacity, seeking to maintain that surplus in future periods. The commercial balance is one of the components of the balance of payments, which is a detailed record of all the economic transactions produced between one country and the other countries of the world, with which commercial relations are maintained, the importance of the trade balance inThe economy is that its calculation helps economists and financial analysts.

These analysts can understand the economic potential of a country in relation to others which helps to determine with which country you want to establish commercial relations or where it would be more convenient to invest. In the middle of globalization, statistics within the merchandise balance of Mexico are very useful, since with this tool the commercial development of each country, the current or future behavior of other sectors and the type of economic structures can be known. For this reason, concerns about the negative impact of trade.

There are also concerns in foreign trade in the employment of the United States and are out of place when it is about Mexico. Unlike overcoming countries, Mexico has no deficiencies in domestic demand that require the export of commercial and savings surpluses. As a net capital importer and for its high current account deficit, Mexico helps absorb excess savings and production that, otherwise, could generate higher commercial deficits in the United States. This does so in two ways. 

In the first place, when the commercial imbalances of other countries are resolved directly by exporting the savings surplus to the United States and indirectly through the export of the production surplus in the form of intermediate goods that are integrated into the world chains of value,Mexico is often the last stage of this process, mainly due to the simplification of the regulations that govern its trade with the United States and the logistics comfort of a shared border. Second, the North American Free Trade Agreement. 

This creates incentives for companies established in Mexico to expand production and exports to the United States, but export income must be automatically recycled in Mexican imports of goods from the rest of the world. Some of these goods are imported directly from the United States. The rest comes from other countries, although in many cases the goods will include intermediate stages developed in the United States. But although the latter does not happen, they continue to reduce the global commercial deficit of the United States. 

This is due to the role that this country plays in the solution of world capital imbalances. By absorbing excess production and excess savings of other countries, much of which are intermediate through the United States, Mexico reduces the amount that must be ultimately absorbed by the US economy. Notwithstanding the foregoing, Mexico’s commercial surplus with the US implies on average, in the 2005-2009 period, a balance of 78.1 million dollars.But if we start from the United States to export American products through its maquiladoras in Asia.

Our proposal is to demonstrate that this surplus is diluted until it falls to the levels of Mexican oil exports. Such a thing considering that there is smuggling, of which there are calculations and we are only at the most conservative point, that is 10%, but that it can be much greater. As demonstrated in the figures, with simple sums-rest it is evidence.

Now, 14 years later, you have the highest surpluses in history. Deducing the trade of American firms in Asia, and with a conservative calculation of smuggling, only the amounts of oil exports remain, which have obviously been increasing due to world demand and logical price elevations;But this means increases in important exports of other products outside the oil, especially small and medium producers, which are oblivious to the benefits of free trade and their 14 treaties, agreements and agreements with 42 countries. 

With this, export growth reaches the consolidation of a corporate economy with large intrafirma operations, but with little or minimal absorption and influence on the domestic economy. That is, even when the figures are very high, they have little impact on national growth, employment, salary and social welfare. That is why we must be careful how we interpret Mexico’s bilateral surplus with the United States. As seventh major capital excess receiver in the world.

conclusion

Mexico and its trade help reduce the American commercial deficit by moderating world imbalances. The world commercial system clearly needs some arrangements, but punishing Mexican exporters would do nothing to solve the fundamental problem of excess savings in certain countries. Worse, the commercial imbalances of the United States were exacerbated.