US and Factor Mobility Analysis
Theory of Factor Mobility, as discussed by Daniels, Radebaugh & Sullivan (2018), involves the movement of capital and labor across the boundaries. Factor mobility theory can be best described using the Taiwan case . When Taiwan reduced trade restrictions to allow imports, its exports increased by 100 percent, and also its labor challenges were resolved because it was able to import foreign workers, a move that increased the country’s production.The United States can enter trade agreement with Brazil and United Kingdom. Brazil is known as leading coffee producer in the world (Walton, 2019). On the other hand, United States is the second-largest coffee market in the world. With trade restrictions between the two countries, the cost of coffee being imported by Brazil to United States will be higher than when the two countries are in free trade agreement. The United States will also enjoy cheap labor from Brazil and increase its production as well as the overall exports. Brazil being a developing nation, it lacks strong technological power as United States. Upon entering into trade partnership with the United States, Brazil will benefit from technical expertise that it can use to boost its coffee production as well as the quality of the produce. This will help Brazil to maintain its coffee production competitive advantage in the global arena.
The trade partnership between the United States and the United Kingdom will also benefit the two countries. Although there is existing mutual trade relationship partnership between the two countries, the trade between two nations would be more beneficial if it is carried under free trade agreement. With free trade, the United States car exports and other products to United Kingdom will increase. United kingdom exports including machinery and precious metal to United States will increase too.
References
Daniels, J. D., Radebaugh, L. H., & Sullivan, D. P. (2018). International Business: Environments and operations (16th ed.). Retrieved from https://www.vitalsource.com/
Walton, J. (2019, Feb 9). The 5 Countries That Produce the Most Coffee. Retrieved from https://www.investopedia.com/articles/investing/091415/5-countries-produce-most-coffee.asp