America Regaining Energy Cost Advantage With New Tech - Essay Sample

Introduction

America is regaining the comparative advantage in the area of energy costs as a result of new technology. As the country has a share of natural gas ranked second across the globe, modern technology has been developed to exploit such an abundance of natural gas (Naim). For instance, fracking which is a new technology of extracting oil and gas has increased production which as a consequence "...will soon lower natural-gas prices to well below the world average..." (Naim). Such a factor consequently hands America a unique advantage.

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Innovation/Automation

Secondly, America is regaining the comparative advantage in the area of innovation/automation due to increased innovation and improved capabilities in robotics acquired are low costs. As a result, "...automation and robotization of manufacturing plants will further increase efficiency and precision" (Naim). Furthermore, innovation has led to the development of technology capable of production processes which generate products that other countries cannot imitate. For instance, the application of nano and biotechnology has resulted in the development of transistors which have a high rate of performance and composite materials which are light and ultra-strong (Naim).

Labor Market Cost

Thirdly, America is regaining the comparative advantage in the area of labor market costs as a consequence of automation. Increased automation and robotization in America has resulted in a drastic reduction in costs associated with labor as "...machines are likely to displace many workers" (Naim). Nonetheless, automation provides increased efficiency and precision, which consequently translates into increased profits hence why America is regaining the comparative advantage (Naim).

Transportation Costs

Last but not least, America is regaining the comparative advantage in the area of transportation costs as a consequence of reduced costs of labor made possible due to increased automation in the country. Previously, "...there was a general exodus to Asia in search of lower costs..." ("Coming Home"). However, due to an increase in automation which has resulted to low costs of labor, America offers a suitable environment for doing business as issues that would be tied to shipping goods over oceans such as costs and time are eliminated. For instance, as things currently stand, producing products in China is only 10% cheaper than production in America without the inclusion of benefits that come along with producing goods domestically ("Coming Home"). Hence, the addition of benefits of that come with domestic production make business in America cheaper hence why its regaining comparative advantage in transportation costs.

Works Cited

"Coming Home". The Economist, 2013, https://www.economist.com/special-report/2013/01/17/coming-home.

Naim, Moises. "America's Coming Manufacturing Revolution". The Atlantic, 2014, https://www.theatlantic.com/business/archive/2014/04/americas-coming-manufacturing-revolution/360931/.