THE U.S. ELECTION AND TRADE

THE U.S. ELECTION AND TRADE

By Michael R. Czinkota *

 The candidates in the U.S. presidential election have had heated exchanges. Each one of them tries to pick up those few undecided votes which make all the difference. Clever pollsters are using their newest tools to identify and pursue the maybe’s.

For me, as teacher of international business and trade, I wonder what the victory of any one candidate mean for my field – how will international trade be affected? International trade in goods and services comprises now almost 30% of US GDP –making it a vital component of the domestic economy. The fact that exports have been mentioned several times in the various debates, highlights that politics gradually accepts the importance of trade.

How do the candidates stack up?

First , President Obama: He has led for almost four years now and been able to demonstrate his commitments. He has signed three Free Trade Agreements which had been negotiated by President Bush – but there are 193 countries left. He helped conclude long term negotiations to let Russia enter the World Trade Organization this year. The President has taken a number of trade actions, and even declared Chinese car tires to be too cheap and has limited their import. He has also frequently admonished the Chinese government to increase the value of its currency.   He has promised in 2009 that he will strive to double US. exports in five years.

Now to Governor Romney: He talks about trade in virtually every speech he gives. Just like the young Japanese mother whispers to little Masaaki “export my baby, export a lot”, the governor tries to inculcate key international trade values and desires in his audience. He recognizes the importance of currency values. Through his work in the private sector he has seen the threats and benefits of the global economy, and has recognized that there is no reason for the United States to play second fiddle. At the same time, his experience gathered abroad allows him to understand the importance of different cultures, and the need to consider issues which, at home might be unexpected, but can be routine abroad. He stresses the importance of helping firms to enter global markets and talks about profits as the key motivator to such market entry. He talks in terms of competitiveness both for firms and their employees – which in turn leads him to stress the importance of an internationalized education.

A second term President Obama would devote some attention to trade issues – but, just like Israel, they are not really a core component of his global posture. The entire issue of competitiveness of firms is seen as something at which one throws money (and loses large amounts of it) – rather than the building process of innovation. Plans like doubling exports don’t portray a vision which is what we need in the international arena. There is a big difference whether one talks about straightening out a road versus offering the vision of a national highway system. There is a lot of earnest belief, that government can drive the export success of the nation. Those in the trenches claim that the real trade volume comes from firms, particularly those who have had the inclination and opportunity to research the requirements of their markets abroad.

A President Romney is likely to upset some long term traditions – be they in currency markets or in trade agreements. He is more likely to link specific performance and assistance. It would not be impossible for President Romney to declare the Doha Round of trade negotiations as a failure, and search for a new approach to an expansion of trade. He might be more in the face of partner governments, but his actions would be more swift and perhaps even more harsh. As a firm believer in markets, a President Romney might encourage students to get ready for a globalized economy, explaining that unmotivated, disinterested, or uneducated members of the work force need to change their attitude dramatically if they wish to do well. Mr. Romney is brimming with excitement to do something about the U.S. trade position in the world. It may bring some pain, but still better than another bursting bubble.

So, where does that leave us? Of course there are many considerations based on which we select our favorite. An increasingly important one is trade. I think both candidates will support trade, but it  seems that this support will come with varying intensity. Voters should keep that in mind as they cast their ballot.

 

*Michael Czinkota teaches international business and trade at Georgetown University. He served in trade policy positions during the Reagan and Bush administration. Contact: czinkotm@georgetown.edu

The Silver Cloud Overhead – Pros and Cons of Cloud Computing

Technology transforms the way individuals, businesses, and governments conduct themselves. Today, with the integrated use of the internet and devices such as smartphones, tablets, laptops, and computers, individuals have become much more empowered. The most popular product of the combination of the internet and these devices has been ‘cloud’ computing. Commonly referred to as ‘the cloud’, it  allows individuals and businesses to use applications without installing them on their computer to access personal files at any computer or device with internet access, i.e. Gmail, Facebook, Yahoo, etc.  The ‘cloud’ has been considered the driver of future growth by many companies today, such as IBM, Apple, and Amazon.com. But along with the benefits of technological advances there come certain set-backs. The following are pros and cons about ‘cloud’ computing for businesses today:

PROS

  • In a developed country, tapping into the Cloud for data assures users of a pure product
  • May reduce costs
  • Improves efficiency
  • Drives innovation
  • Allows for business to start up faster
  • Allows for businesses to adjust to changes in demand more quickly
  • Infrastructure and service costs can be shared with other entrepreneurs and business owners

CONS

  • Erodes corporate control
    -Companies may lose complete control over everything in the networks
  • Security threats
    -Hacking: Certain data or information may be compromised by unauthorized issues
    -Bad data can be transmitted through a laptop or tablet from a person’s
    home network to the ‘Cloud’
  • Interoperability issues
  • Portability issues

QUESTION: What has your experience been in using cloud computing, what benefits and drawbacks have you experienced? Let us know!

Beyond International Trade

Source: World Bank (WB)

The East Asia and Pacific Region are no strangers to international trade, with a great portion of its growth coming from exports. However, the World Bank has recently released a report stating that growth in the region is still strong but slowing, from nearly 10% growth in 2010 to 8.6% in 2011. This comes as a result of  the lower growth in manufacturing exports and supply disruptions in light of the Japan earthquake and Tsunami and severe flooding in Thailand, Lao, PDR, and Cambodia. With the EU, U.S., and Japan accounting for more than 40% of the region’s exports, and their current weak demand which is most likely to remain weak, it has been suggested that countries in East Asia and the Pacific need to rely less on exports and more on domestic demand to maintain high growth.

To read more about this issue, click here.
To download the full report, click here.

The Global Rise of Social Media

As the Internet gains momentum worldwide, firms are using social media to undertake international marketing campaigns. Because social media are cost-effective, even small firms can market offerings to market niches around the world.

Leveraging social networks can be especially effective in emerging markets and developing economies, where consumers may be less receptive to traditional Western forms of marketing communications, such as TV and print advertising.

Some cultures appear to lend themselves especially well to social media marketing approaches. For example, collectivist cultures characterized by a high need for social affiliation and respect for peers are likely to value the brand-oriented interaction available through social media. China is one of the top users of e-mail and social media worldwide, and the Chinese tend to exhibit a strong preference for online media that enhance social relationships. The market for credit cards in Russia is still emerging, and finding information on the credit worthiness of cardholders is challenging. Banks leverage social sites, such as Vkontakte and Odnoklassniki, to identify potential users with strong potential credit ratings.

Marketing communications using social media represent the new frontier in international marketing. Social networks are considered increasingly critical to any interactive marketing communications program. Marketers aim for brand engagement; that is, they want customers to develop a personal relationship with the brand. Social media represent perhaps the best means for achieving this closeness.

Share with us your thoughts on International Business, Marketing, and Strategy. Follow me on Facebook and Twitter.

The Cartagena Incident: Affirming U.S. success

by Michael R. Czinkota and Ireene Leoncio *

During the past days emotions have been running high about the U.S. Secret Service alliance with ladies of the night in Colombia. An ‘incident’ has mushroomed into a self-inflicted ‘policy debacle’. Some policy makers, in describing this apparent scurge of mankind, appeared to recommend firing everyone who ever had lust in their hearts. The Senate majority leader’s solution is to hire many more women for the Service. Others suggest that protocols and training for protective details need to be tightened; even the possible use of the ‘honey trap’ strategy is suggested by some. A merchant seaman with great experience writes in an editorial that the lesson learned should be to ‘always pay your bill’! President Obama, who was the object of all the protection, used the annual White House correspondents dinner to crack jokes about the affair. I find all the public anxiety vastly misplaced, and the event’s effect on the U.S. reputation misinterpreted […]

To read the entire article, click here.

Professor Michael R. Czinkota teaches International Business at Georgetown University in Washington D.C. He can be reached at michaelczinkota.com. Ireene Leoncio is a graduate student from the Philippines at Georgetown University and serves as President of the Graduate International Student Association.