Trade Issues | |
Exporting Countries Import Goods |
Many people think increasing exports is the key to economic growth, and reducing imports by protective tariffs is a good idea. But what it takes to be a top exporting country is -- imports. That's because producing a good to sell to other countries requires many inputs -- basic materials, manufacturing equipment, computers and so forth -- at least some of which probably come from abroad.
Classifying a good as an export or import depends on the stage of production you look at. For instance, many goods today are imported for assembly, finishing or packaging and then re-exported to other countries. Today as much as two-thirds of all trade is within multinational firms -- moving goods between units in different countries -- says the United Nations' World Investment Report.
Economists say it doesn't matter if the value of imports or exports is greater; what is important is the total value of economic activity -- and international trade adds to that value.
Source: Editorial, "The Cult of the Export," Far Eastern Economic Review, October 10, 1996.
For the effects of trade on wages, see Executive Alert archives at http://www.ncpa.org/ea/eama95/eama95d.html
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