Trade balance’s leverage within the GDP

Discussion in 'Economy' started by Supposn, May 9, 2010.

  1. Supposn
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    Supposn Senior Member

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    Almost all production of goods and services are to some extent supported by other production within the exporting nation. Secondary productions are not always or entirely included within the pricing of all goods.

    For example: There is infrastructure, courts, and law enforcement services. Local high schools and community colleges usually offer some specialized training courses that are applicable to major local industries. There’s research, development and other government and non-government goods and services that specifically bolsters local industries. To whatever extent that export producers do not fully pay their equitable share for such direct or indirect production supports, these pricings are not included within total export pricing.

    Production of exports often induces increased production of goods and services that are completely unrelated to the exports. For example local producers of exports increase beauty parlor revenues and/or public library’s hours of operation. These pricings are entirely excluded from total export pricing.

    Secondary production expenditures are not included within export pricings and they vary (I suppose) for categories of trade goods and services. Economists’ estimates range from significantly more than full price to twice the amounts of export’s pricings. The expenditures cannot be readily identified but they are captured by domestic expenditures within the exporting nation’s GDP formula.

    The portions of nation’s domestic expenditures actually due to exports’ secondary production can only be estimated but they certainly contributed to nations actual GDPs.

    Aside from the prices of imports themselves, the reductions of domestic expenditures due to lack of the imports’ secondary production can only be estimated. They certainly reduced GDPs to the nations’ actual levels.

    By definition trade deficits contribute nothing to a nation’s GDP. Trade deficits are logically detrimental to the GDP.

    GDP = [domestic expenditures] + [balance of trade]
    [Domestic expenditures include all investment of goods and services but do not include transfers of wealth where no actual goods or services were produced].

    Refer to www.USA-Trade-Deficit.Blogspot.Com
    Google “ wickipedia, import certificates, buffett “
    Respectfully, Supposn
     
  2. editec
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    editec Mr. Forgot-it-All

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    Exported good give us a double good whammy, that is true.

    Not only does their local production resonate through the economy as their workers buy locally, but the foreign money brought into this economy is ALSO resonating in the local economy, as well.

    And imports work is EXACTLY the same way, except negatively.

    That is why so many Americans (like myself) oppose FREE TRADE as currently practiced.

    WE opened our shores to foreign imports, but many of our "most favored nations" trading partners are not doing likewise.

    China, for example, at minimum imposes a 15% VAT tax on any manufactured goods coming into their nation.

    That disadvantages American industries selling into that nation.
     
    Last edited: May 9, 2010
  3. Mike Mitrosky
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    Mike Mitrosky Member

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    I hate the gdp.. Im a gnp kinda guy
     
  4. Supposn
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    Supposn Senior Member

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    Mike Mitrosky,
    . . . GNP includes the goods produced beyond our borders by subsidiaries of corporations headquartered in the USA.

    There is no such thing as a USA corporation. There are corporations with USA headquarters. No one can fully serve two masters. CEO’s allegiances are divided among their own self interests, that of their corporations their fellow executives, and their stockholders. Any allegiance to their laborers or their nation gets lost that mix.

    It is usual to rationalize your own best interests as being the same as that of all other’s you claim to serve; It’s easy to rationalize your corporation’s best interest as that of your laborers or of your nation. “It ain’t necessarily so”.

    The vast proportions of economic benefits derived from production are enjoyed by the producing nation. To the extent that a USA Toyota is comprised of USA labor, materials, and components, it is a domestic product that fully contributes to USA’s economy. To the extent that a GM or any other vehicle is comprised by foreign labor, materials, and components, it is a foreign product that fully contributes to foreign nation’s economies.

    Respectfully Supposn
     

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