DSGE
VIP Member
- Dec 24, 2011
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Some specific product prices may not reflect all goods and service that contributed or supported the production of the specific items.
Enterprises occasionally benefit from university or government research and development assistance provided at lesser or no cost to the enterprise. Local governments may provide beneficial infrastructure to induce an enterprises relocation. Enterprises may manipulate their cost accounting to encourage the market for their newer products. All of this is of no consequences with regard to domestic products sold within the nations domestic markets.
The majority of goods and services that support the production of a final product global product are produced within the same nation as the final product. To the extent that those supporting products are not included within the prices global products they support, global product prices are understated.
The benefits of production are earned by the producing nations and denied to the importing nations;
(i.e. ALWAYS trade surpluses contribute and trade deficits are detrimental to their nations GDP).
Furthermore due to under-statements of global trade products prices,
Surpluses contributions and trade deficits detriments to their nations GDPs are generally understated.
Respectfully, Supposn
So we've moved away from the GDP = C + I + G + X - M argument? We're clear that that doesn't imply that imports lower GDP? If that's the case, and we're moving on to a different line of argument, then I'll respond to this.