In the dynamic world of global trade, consideration of major influences on foreign demand is essential to understand the fluctuations of this potentially large market. The openness of overseas markets is the most fundamental determinant of foreign demand. In the past, agriculture was omitted from most international trade agreements because it is closely tied to sensitive domestic policy and social issues in many countries. However, the last several years have brought breakthroughs for world and regional trade. Fluctuations in world economic performance also influence demand for U.S. exports.
Countries can sustain higher levels of imports when their incomes rise.
Differences between world and U.S. growth rates impact heavily on the trade balance. Figure 2, for example, demonstrates how U.S. agricultural exports to developing countries rise and fall with foreign income growth. The growth rates of all nations are interrelated through the effects of each government's macroeconomic policies. The debt crisis that occurred in many developing countries in the early 1980's is an example. During this period, the United States pursued a tight monetary policy to combat domestic inflation.