How to picture the US/European economic partnership?
You could think of Skippy Peanut Butter. Owned by Unilever, a multinational based in the UK and the Netherlands, Skippy’s peanuts are grown primarily in Georgia and Texas, shelled and sorted here, and then made into peanut butter. As a result, a European firm is providing business to US farms, it is building US factories, and it is creating US jobs.
For another side of our economic partnership, you might imagine Texas. During 2009, totaling close to $25 billion, exports from Texas, including petroleum, electronics, crops, and transportation equipment, were primarily sold in the Netherlands, the UK, Belgium, France and Germany. Meanwhile, European foreign affiliates were responsible for 212,000 jobs and invested close to $60 billion in Texas.
Or, we could just think of Bic, Adidas, Ben & Jerry’s Ice Cream, Trader Joe’s, and Sunglass Hut…all European firms.
In this 169 page report from Johns Hopkins, a detailed description of the transatlantic trade tells us that the US and Europe dominate each other’s trade activities. Ranging from California at the top to Hawaii at the bottom, every US state exports to Europe and receives European goods and services.
The Economic Lesson
You can see where this is going. Looking at foreign affiliates, foreign direct investment, jobs, exports, intrafirm trade, shared financial services and R & D, the US and Europe are closely tied. Looking at both directions, what European firms have here and what we have there, we see a massive economic connection. As a result, turmoil in the euro zone means more to us than a continent’s well being. It touches our own economy directly.
An Economic Question: Referring to transatlantic trade, how might euro zone economic woes specifically affect the US GDP?