The U.S. Trade Deficit - Research Paper Example

The U.S. Trade Deficit The U.S originated from the revolution that separated it from British Crown. Its constitution was drafted in 1787, which led to the establishment of a federal system of governance. The country has a diverse population, which was made possible by waves of immigration that reached peak in mid-20th century. Immigration has continued to push the Native Americans to the point that they may become minority in the near future. The U.S is currently the most economically foremost nation globally with an unmatched global influence and reach (United States of America country profile, 2012). Its GDP is almost a quarter of the global GDP combined. In addition, its military budget is as much as the entire globe’s defense spending combined. As per the UN 2010 estimates, the U.S has a population of close to 318 million and the largest city is New York with Washington DC as the capital. The main language spoken is English while the major religion is Christianity. The U.S Dollar is the monetary unity or the denomination. The American business environment expects etiquette, professionalism, and efficiency when conducting business. The political environment of the U.S has been stable for a long time. The country is headed by the Democratic Party, which has been leading the country since 2009 through the current President Barrack Obama who was elected in 2008. By 2008, the country was facing its worst economic crisis since the 1930 depression as the cost of living had skyrocketed towards the end of President Bush’s administration. American political environment is characterized by federalism, separation of powers, checks and balances, and representative democracy. The American legal environment comprise of laws that businesses are required to follow for the interest of the environment and the American population. The government shows more seriousness in the environmental policy, which seeks to ensure that activities are, regulated so as to reduce impact on the environment. There are many laws and bodies that enforce them such as the Environmental Protection Agency that controls ideas such as disposal of hazardous waste. The U.S economic environment has been recovering since the recent economic crisis that hit the country towards the second half of the last decade. According to the IMF, although the recovery has been moderate, the underlying fundamentals have experienced gradual improvements. The country has seen a modest growth rate of 2.2% throughout the 2012 financial year. This reflects the effect of the financial crisis of 2008, effects of weather related happenings, and a reduction in fiscal deficit (Bernstein, 2013). Specifically, the labor market conditions in U.S have improved, construction and house prices have also improved, and the corporate balance sheets as well as profitability have remained strong mostly for large businesses. The business environment in U.S continues to be highly developed. This implies that the U.S is the most technologically advanced country in the world. This advancement has been applied in the business world to improve efficiency and reduce wastage. The modern business environment as increased the number of regulations that businesses are required to follow which has been affecting the operating environment in that it is becoming less attractive to new entrants (Nissen, 2012). Business activities have become more regulated although this has not improved the attractiveness of the U.S business environment. In 2013, the overall trade conducted by U.S and other countries amounted to $5 trillion. The overall exports were $2.3 trillion while the imports amounted to $2.744 trillion (Amadeo, 2014). This comprised both goods and services. Globally, the U.S realized the third position with respect to exports after China and the E.U. With respect to imports, the U.S was the globes second largest importer after the E.U With respect to the balance of payments, the U.S trade deficit hit the peak in 2006 when it amounted to $753 billion, which lowered during the recession but is currently rising again. In the financial year 2012, the deficit was approximately $539.5 billion. This value was reached after the subtraction of the exports from the imports. The exchange rates have been fluctuating in the modern world although it is currently improving. When compared against the Euro, the U.S Dollar has maintained a slim lead as 1 US Dollar is equal to approximately 0.7 Euro. The American social environment comprises of 76 million baby boomers who will retire in the near future. By 2025, the U.S will comprise of 19% of individuals older than 65 years. According to the most recent census data, the Hispanic population surpassed the whites in New Mexico and the current trends of immigration are endangering the white population. As per the population, America has approximately 318 million people where 82% of the population lives in the urban areas. The fertility rate is 1.88 children for every woman, which is considered replacement. The fertility rate is lower than that of France and the U.K. The number of male citizens is 151 million while the females are approximately 158 million. The whites constitute 72% of the population and population increase is mostly being experienced among the minorities. The technological environment of the U.S has been on constant improvements. The business sector has benefited the most both with respect to communication advancements as well as with respect to efficiency. Currently, the U.S is the most technologically advanced country on the globe, which has improved efficiency in businesses although it has led to other regulations that require firms to use the most efficient equipment in production so as to reduce environmental impact. Despite being western, the American cultural environment has been influenced by African Asians and Latin American cultures among other groups. The cultural values are based on a belief of personal freedoms, privacy, equality, informality, and freedom of speech. In addition, it also involves both liberal and conservative elements in addition to religious competitiveness. Due to the demography, the American cultural environment comprises a variety of expressions. With particular attention to the power distance index, America has a score of 40 on the cultural scale. This is because the U.S has an unequal environment with regard to distribution of wealth as compared to other regions such as Germany. Malaysia leads in the power Distance Index with an outstanding score of 104 as compared to U.S, which has a score of 40 (Power Distance Index, 2014). The influence of individualism in the U.S is clear. This society believes that people should not be interrupted while pursuing private satisfactions. This emphasizes a person’s achievement as well as self-fulfillment in the society. The American society has been individualistic since their ancient times. Collectivism can also be seen in race, class, and gender aspects (Krumm, 2014). Masculinity and femininity also have a significant view in the U.S. This is because they present one of the differences between U.S and other countries with regard to gender. Inequality based on gender is present in U.S although there are efforts to eliminate it by prohibiting stereotyping (Choeferle, 2009). The country’s score on masculinity is as high as 62 and can be clearly seen in the behavioral patterns of the society (United States, n.d). Uncertainty avoidance index is considerably low in the U.S. The U.S comprises of a nation that does not back down because of the possibilities of certain occurrences in the future (Uncertainty Avoidance, 2014). This culture is comfortable with most situations and usually looks for a positive aspect in a negative situation or in an uncertain future. Long-term orientation of the U.S is considerably low in that Americans show a greater orientation towards freedom from long-term commitments (Roberts & Taylor, 2012). This is because the society has greater flexibility and the freedom to react fast to new opportunities. Based on the analysis of U.S, the most realistic business idea includes a flexible business in that it is able to adapt to changes in the customer preferences so as to remain profitable such as a restaurant that mostly deals with fast foods. This business would perform well in this environment due to several factors that include the population and the characteristics of this population. A restaurant is a flexible business in that adjustments would be made almost immediately to meet the requirements of this market. In addition, this form of business does not require long-term commitment, which is not prevalent in the U.S. Additionally, due to the projections of the population to increase in the future, the business would have an opportunity to expand in the future. References Amadeo, K. (2014). The U.S. Trade Deficit. Retrieved from http://useconomy.about.com/od/tradepolicy/p/Trade_Deficit.htm Bernstein, J. (2013). The Current U.S. Economy: Text and Subtext. Retrieved from http://economix.blogs.nytimes.com/2013/06/17/the-current-u-s-economy-text-and-subtext/?_php=true&_type=blogs&_r=0 Choeferle. (2009). USA vs. Germany: Masculine vs. Feminine? Retrieved from http://southeastschnitzel.wordpress.com/2009/06/01/usa-vs-germany-masculine-vs-feminine/ Krumm, A. (2014). Individualism vs. Collectivism in America. Retrieved from http://convictionsoffaith.com/2013/2012/05/14/individualism-vs-collectivism-in-america Nissen, M. (2012). Why The US Scored So Low On A Global Business Environment Ranking. Retrieved from http://www.businessinsider.com/why-the-us-scored-so-low-on-a-global-business-environment-ranking-2012-10 Power Distance Index. (2014). Retrieved from http://www.clearlycultural.com/geert-hofstede-cultural-dimensions/power-distance-index/ Roberts, K. & Taylor, S. (2012). United States of America Business Etiquette, Culture, & Manners. Retrieved from http://www.cyborlink.com/besite/us.htm Uncertainty Avoidance. (2014). Retrieved from http://www.clearlycultural.com/geert-hofstede-cultural-dimensions/uncertainty-avoidance-index/ United States. (n.d). Retrieved from http://geert-hofstede.com/united-states.html United States of America country profile. (2012). Retrieved from http://news.bbc.co.uk/2/hi/americas/country_profiles/1217752.stm Read More