Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
[b]Trade Balances' effects upon their nation’s GDP.[/B
Excerpted from the Wikipedia article entitled “Balance of trade”:
Annual trade surpluses are immediate and direct additions to their nations’ GDPs. To some extent exports induce additional increases to GDP that are not reflected within the export products’ prices; thus contributions to GDP from trade surpluses are generally understated.
Products’ prices generally reflect their producers’ production supporting expenditures. Producers often benefit from some production supporting goods and services at lesser or no cost to the producers.
For example, governments may deliberately locate or increase the capacity of their infrastructure, or provide other additional considerations to retain or attract producers within their own jurisdictions. The curriculum of a nation's schools and colleges may provide job applicants specifically suited to the producer’s needs, or provide specialized research and development. All national factors of production, including education, contribute to GDP, and unless globally traded products fully reflect those goods and services, these other export supporting contributions are not entirely identified and attributed to their nations’ global trade.
Annual trade deficits are immediate and indirect reducers of their nations’ GDPs.
Trade deficits make no net contribution to their nations’ GDPs but the importing nations indirectly deny themselves of the benefits earned by producing nations; (refer to “Annual trade surpluses are immediate and direct additions to their nations’ GDPs”). Among what’s being denied is familiarity with methods, practices, the manipulation of tools, materials and fabrication processes.
The economic differences between domestic and imported goods occur prior to the goods entry within the final purchasers' nations. After domestic goods have reached their producers shipping dock or imported goods have been unloaded on to the importing nation’s cargo vessel or entry port’s dock, similar goods have similar economic attributes.
Although supporting products not reflected within the prices of specific items are all captured within the producing nation’s GDP, those supporting but not reflected within prices of globally traded goods are not attributed to nations' global trade. Trade surpluses' contributions and trade deficits' detriments to their nation's GDPs are understated. The entire benefits of production are earned by the exporting nations and denied to the importing nation.
The entire benefits of production are earned by the exporting nations and denied to the importing nation.
You didn't mention another item. How the books are balanced.
The importing country sells debt and the exporting countries buy it. If this condition persists, the importing country's fiscal debt escalates to the point where it is unsustainable, and the interest payments are a further drain on the economy.
US Treasury securities are an integral part of the global economy. Back in the days of Bill Clinton, there were no fiscal deficits to finance, and in fact the Treasury was letting maturing issues simply expire without replacing them. The Bond Marketing Association had to send emissaries off to the White House to note that bond markets were being seriously strained due to a lack of product. Treasury then shifted to a series of reverse auctions to identify the notes to be bought in. That made things a little easier. In general, the people who hold US debt do so for a reason, and in the clear majority of cases, those reasons still hold.
[b]Trade Balances' effects upon their nation’s GDP.[/B
Excerpted from the Wikipedia article entitled “Balance of trade”:
Annual trade surpluses are immediate and direct additions to their nations’ GDPs. To some extent exports induce additional increases to GDP that are not reflected within the export products’ prices; thus contributions to GDP from trade surpluses are generally understated.
Products’ prices generally reflect their producers’ production supporting expenditures. Producers often benefit from some production supporting goods and services at lesser or no cost to the producers.
For example, governments may deliberately locate or increase the capacity of their infrastructure, or provide other additional considerations to retain or attract producers within their own jurisdictions. The curriculum of a nation's schools and colleges may provide job applicants specifically suited to the producer’s needs, or provide specialized research and development. All national factors of production, including education, contribute to GDP, and unless globally traded products fully reflect those goods and services, these other export supporting contributions are not entirely identified and attributed to their nations’ global trade.
Annual trade deficits are immediate and indirect reducers of their nations’ GDPs.
Trade deficits make no net contribution to their nations’ GDPs but the importing nations indirectly deny themselves of the benefits earned by producing nations; (refer to “Annual trade surpluses are immediate and direct additions to their nations’ GDPs”). Among what’s being denied is familiarity with methods, practices, the manipulation of tools, materials and fabrication processes.
The economic differences between domestic and imported goods occur prior to the goods entry within the final purchasers' nations. After domestic goods have reached their producers shipping dock or imported goods have been unloaded on to the importing nation’s cargo vessel or entry port’s dock, similar goods have similar economic attributes.
Although supporting products not reflected within the prices of specific items are all captured within the producing nation’s GDP, those supporting but not reflected within prices of globally traded goods are not attributed to nations' global trade. Trade surpluses' contributions and trade deficits' detriments to their nation's GDPs are understated. The entire benefits of production are earned by the exporting nations and denied to the importing nation.
You forgets the value that is added by selling the imported goods within the country. If you buy a pair of Nike shoes in the UK for 100 Pounds, that contributes 100 Pounds to the British GDP. The shoes were imported from China for 15 Pounds. Still remains 85 Pounds for the British GDP. Without importing those shoes you can't buy them in the UK. And the British GDP will lose 85 Pounds. Actually rising imports will lead to a higher GDP, not lower. You can observe this at the moment in the UK, and also in Greece. Greece had to reduce their imports significantly, that leads to a massive drop in GDP. If the UK had to reduce their trade deficit to zero in just a few years, the country would fall into a severe recession.
The benefits of production a good is the good itself. If you export the good to an other country, the benefits is gone. You just get a claim in return. With this claim you can buy a foreign good in the future. Or maybe not if the country can't pay their debts, like Greece at the moment.
Major Barbara, bottom line is annual trade deficits immediate detriment to their nation’s numbers of jobs which in turn somewhat reduces the nation’s median wage. These consequences are not beneficial to their nation’s economy.
The benefits of production a good is the good itself. If you export the good to an other country, the benefits is gone. You just get a claim in return. With this claim you can buy a foreign good in the future. Or maybe not if the country can't pay their debts, like Greece at the moment.
You are missing pretty much everything with this sophistry.
You only need to look at precisely what has happened to countries that have experienced high sustained trade deficits. The US is the best example. Fiscal debt escalates (this is necessary to balance the books) and domestic investment, production, and wages fall.
Regardless of what happens to GDP, this is a bad deal for 99.9% of the population.
Florian D, no; I did not overlook the added values due to imported product s distributions. within the USA. That’s not added value due to, or attributable to the fact that those products were imported.
The entire economic differences between domestic and imported goods occur prior to the goods arriving upon their USA producers’ shipping platforms or when the imported goods are being unloaded upon a cargo with USA transporter crewed by USA laborers or when the goods are being unloaded at their USA port of entry.
[I’m among the proponents of a unilateral Import Certificate policy that in a similar manner treats goods entering the USA.
Refer to http://www.city-data.com/forum/econo...-median-5.html .
Under a policy of transferable Import certificates, in cases of USA products composed of imported materials or components, shipments of those items are treated exactly in the same manner as we would treat imported finished products].
Starting from goods within the USA ready to be distributed and or used within the USA, there’s no economic difference between similar imported or domestic produced goods.
Our annual trade deficits are detrimental to our numbers of jobs and to the purchasing power of our median wage.
Cheaper priced imported goods do not compensate for out trade deficits net financial harm to our aggregate families dependent upon their USA wages and salaries.
Florian D, in regard to trade deficits relationships to their nations’ GDPs:
Nations’ global balances of trade are integral within the formulas for calculating their nation’s gross domestic product, (i.e. GDP).
Positive balances, (i.e. trade surpluses) contribute and negative balances, (i.e. trade deficits) are detrimental to their nations’ GDPs.
Respectfully, Supposn
Please don't tell me such trivia Of course the trade deficit will reduce the GDP. But before this subtraction took place, all consumer spendings were counted as a part of GDP. The average price of an imported pair of shoes is about $10. The average retail price is maybe about $40. The difference of $30 (transport, wholesale, retail) is of course counted as American GDP.
Without those imports you can't sell the imported shoes in the U.S. Of course America could start to produce shoes itself. But that would lead to much higher shoe prices. The U.S. is probably not able to manufacture enough goods to achieve an even trade balance.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Of course the trade deficit will reduce the GDP. But before this subtraction took place, all consumer spendings were counted as a part of GDP. The average price of an imported pair of shoes is about $10. The average retail price is maybe about $40. The difference of $30 (transport, wholesale, retail) is of course counted as American GDP. 
