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Growing U.S. Trade Deficit in Consumer-Oriented Agricultural Products

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  • Zhuang, Renan
  • Koo, Won W.
  • Mattson, Jeremy W.

Abstract

We investigate the factors behind the growing U.S. trade deficit in consumer-oriented agricultural products by using reliable panel data and an empirical trade model derived from international trade theory. The results indicate that per capita income in the United States appears to be the most important determinant for the growing U.S. trade deficit of consumer-oriented agricultural products. An increase in per capita income and trade liberalization in foreign countries would improve the U.S. trade balance. U.S. foreign direct investment abroad in food manufactures and the North American Free Trade Agreement (NAFTA) are found to have negative effects on the U.S. trade balance.

Suggested Citation

  • Zhuang, Renan & Koo, Won W. & Mattson, Jeremy W., 2008. "Growing U.S. Trade Deficit in Consumer-Oriented Agricultural Products," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 40(3), pages 1-13, December.
    • Handle: RePEc:ags:joaaec:47270
    DOI: 10.22004/ag.econ.47270
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    References listed on IDEAS

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    1. Somwaru, Agapi & Bolling, H. Christine, 1999. "U.S. Foreign Direct Investment And Trade: Substitutes Or Complements? The Case Of The Food Processing Industry," 1999 Annual meeting, August 8-11, Nashville, TN 21715, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Andrew K. Rose & Eric van Wincoop, 2001. "National Money as a Barrier to International Trade: The Real Case for Currency Union," American Economic Review, American Economic Association, vol. 91(2), pages 386-390, May.
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