Question
Read the article then answer the following questions.
1. How has the North American Free Trade Agreement affected the flow of manufacturing jobs in and out of the US?
2. What factors attract foreign businesses to the US?
3. How do the jobs that are flowing into the US compare with the ones that are flowing out?
Chapter 17 International Trade This article from the April 2004 Wall Street Journal Classroom Edition offers a broader view of a long-running trend in global trade: the movement of manufacturing and Norihiko Shirouzu explain that while many manufacturing jobs are in turing jobs in the U.S. er countries. In "Two-Way Street," Journal staff reporters Joel Millman S., some foreign companies are eagerly creating new manufac- Before reading the article, you may want to look up the following terms: proxim l ity, incentives, rhetoric, value chain ree trade has hammered a lot of U.S. towns, transaction, Gruma found something else: a c making it easier for companies to send manu- munity eager to offer incentives to persuade the facturing jobs south of ad Mexican company to invest millions more. the border or overseas, and "But free trade works both ways, and just as U.S companies look overseas idling hundreds of American factories and tens of thousands Within a year, Gruma delighted Goldsboro by agree ing to buy an empty warehouse the city owned outside town. The building had sat for four But free trade works both ways, and just as U.S. compa nies look overseas for workers, years, after officials spent more than $1 million trying to mar for workers, a lot of forei81 companies have been expanding their operations a lot of foreign companies hav been expanding their opera- tions in the U.S. and creating new jobs for Americans. The ket it as part of an industrial park. By promising to invest $13 million locally, and add 100 jobs to Barnes's payroll, attractions for them are better i the U.S. and creating new Gruma got $200,000 chopped business conditions, proximity to the ever-expanding U.S consumer market, and the promise of incentives that many U.S. communities offer to attract new off the building's sale price and jobs for Americans. The attractions for them are better another $200,000 in grants defray infrastructure costs. Gruma also received job-cre investment. business conditions, proxim- ation tax credits to offset In 1999, for example, Mexico's largest pro- y to the ever-expanaing U.S. from its state corporate income tax. Ultimately, the Mexican company well exceeded the number of new hires it promised, tripling its Golds- market, and the ducer of corn flour and tor- consumer tillas, wanted to extend its sales territory in the eastern promise of incentives that U.S. The manufacturer found that the quickest way was to many U.S. communities offer boro work force to nearly 200 "This is the second wave of Nafta kicking in," says Todd Malan, director of the buy a rival, Barnes Foods, ven dor of the regional Pepito to attract new investment." brand in Goldsboro, N.C Organization for International After closing the $12 million
Explanation / Answer
Answer:- North American Free Trade Agreement has both positive as well as negative impact on the flow of manufacturing jobs in and out of the USA. On one hand, NAFTA is being accused of making many American manufacturing sector employee jobless as most of the MNCs are looking to establish their production units out of USA in order to utilize the free trade agreement, cheap labour, ease of raw material availability and various types of impetuses provided by the other government.
Similarly, on the other side of the coin, NAFTA has also resulted in creating some job opportunities in the USA as the companies of the other countries are also investing in the production unit establishment so that the above-stated benefits can also be reaped which are being offered by USA government to foreign industries.
This way NAFTA is having both positive and negative impact on the job creation in the USA.
Answer:- The companies which are attracted by the USA are mainly investing in the USA as they are able to find the goods at slicing up the value chain, these firms are also benefiting from the efficient and profitable execution of various activities, greater return on investment, skilled labor force, business supporting policies of USA government, and availability of latest technology.
Answer:- Through the year 2001, 145000 jobs were created in the USA by the Mexican companies which invested in the USA but it is less than the number of jobs which has been shifted to other countries. This figure is a relatively smaller figure. If we go by the industry reports, it is quite evident that at present, the number of jobs created by the foreign firms is increased in number. According to some reports, it is estimated that foreign subsidiaries of foreign companies provided jobs to 6.4 million workers in 2001 which was more than 5.1 million jobs created in 1996 and 4.9 million jobs in the year 1991
