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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.