Answer

The US Imports and Services

            No individual country has all resources, both in terms of products and services that would allow it to sustain itself independently. Accordingly, Knox, McCarthy and Agnew (2014) notes that despite the US being one of the richest countries in the world in terms of resources, it also depends on a number of imports in order to meet its development and other needs. According to the World Top Exports (WTE) the top ten goods imported by the united states as of 2014 include: oil, machines, electrical equipment, vehicles, medical equipment, pharmaceuticals, gems, organic chemicals, furniture and plastics respectively(Workman, 2016). On the other hand, the website further notes that the top ten exports by the US include: Machines and engines, electronic equipment, oil, vehicles, aircraft and spacecraft, medical and technical equipment, Gems and precious metal, plastics, pharmaceuticals and organic chemicals respectively (Workman, 2015).

Absolute and Comparative Advantage

            Schumacher (2012) notes that the concept of absolute advantage was developed in the 1700 by Adam Smith, an economist who defined this concept as the ability to produce a product or service better, faster (more) and cheaper than a competitor with similar resources. This concept is widely applied in international trade and therefore Adam Smith argued that a country that is able to produce more of a product or service it is specialized is able to enjoy absolute advantage when trading with other countries (Hall & Lieberman, 2008). As aforementioned in the list of imports and exports by the United States, it is clear that machines and engines are the leading exports by the country.  This implies that the country is able to manufacture these products more efficiently. If the country’s production efficiency is higher than any other countries producing similar products, the company can be said to be enjoying absolute advantage and will therefore sell more of its machines compared to its competitors (if all other factors like price and demand remain constant).

            On the other hand, David Ricardo agreed Smith’s arguments but dispelled some of it by noting that despite the fact that countries would produce certain products and/or services more efficiently based on the locally available resources, the opportunity cost will guide the decision to major in certain products as opposed to others even when both products can be produced locally (Hall & Lieberman, 2008). In this regard, Ricardo described opportunity cost as the value of the foregone alternative when another option is selected. Schumacer (2012) notes that a low opportunity cost is achieved when the option selected is cheaper than that of the foregone alternative. For this reason, a nation that opts to specialize is a product that is much affordable to produce at the expense of another that it can produce but may be costly, this country is able to enjoy comparative advantage in international trade (Hall & Lieberman, 2008). For instance, the US is able to enhance its comparative advantage by producing aircrafts and spacecrafts as opposed to the production of pharmaceuticals. In this regard, it would rather import the pharmaceuticals.

Effect of Buy Americana on Import Goods

            The Buy Americana campaign was launched to encourage Americans to purchase locally produced products in order to boost the country’s economy. According to the US government, this would promote the revenues and encourage optimization of local resources leading to economic growth (Marotta, 2013). In contrast, this may reduce the number of imports into a country if the demand for the locally produced product remains higher than the supply. Locally produced goods  may be more affordable than imported products if the economics of scale supports local production. Nonetheless, if the demand remains higher than the supply yet the locally available resources are unable to support affordable production. The country will have to depend on the imports. This will therefore imply that the Buy Americana campaign would be unachievable for that period and hence the country would still depend on the imports. Marotta (2013) adds that the opportunity costs make it difficult to produce certain goods locally and therefore the campaign may not be effective for all products despite the government subsidies on the production of the goods as this does not guarantee quality. The US import market will still be stable or even grow despite the campaign since the opportunity cost may make it costly to produce quality products locally and thus continuous dependence on the imports. This is as long as demand and price remains constant. An influx in supply from poor quality yet expensive products will still support the imports market.

            In conclusion, economists note that comparative advantage is dependent on the ability to lower the opportunity costs and therefore since the Buy Americana Campaign fails to offer alternatives for reduced opportunity costs for producers, the campaign is bad. Despite the fact that it would help improve the economy if well-implemented, it does not give the US any comparative advantage yet and thus the country will continue importing since it is more affordable to import than grow produce locally despite the constant demand and low supply.