Excerpted from Wikipedia’s “Balance of Trade” article:
“Trade balances effects upon their nation's GDPs.
Exports directly contribute and imports directly reduce their nation's balance of trade (i.e. net exports). A trade surplus is positive net balance of trade, and a trade deficit is a negative net balance of trade. Due to balance of trade being explicitly added to the calculation of their nation's gross domestic product using the expenditure method of calculating gross domestic production (i.e. GDP), trade surpluses are contributions and trade deficits are "drags" upon their nation's GDP”. …
… Refer to:
“Expenditure Method
http://www.bea.gov/methodologies/index.htm#national_meth
http://www.britannica.com/topic/gross-domestic-product”.
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If a nation experienced an annual negative balance of global trade, (i.e. a trade deficit), that nation’s GDP was less than otherwise. A lesser GDP reflects upon, and is reflected upon by the nation’s lesser numbers of jobs during that same year. I’m unaware of any nation that enjoyed full employment while experiencing an annual trade deficit.
Proving trade deficits are beneficial or not detrimental to nations’ GDPs by statistical “proofs” are based upon specious reasoning.
[Within a nation’s markets, both their domestic and imported goods are sold. (We have no general rules applicable to aggregate types of goods and the proportional volumes between domestic and imports sold within each nation’s domestic markets during each of their markets differing conditions].
Generally, we expect that during a nation’s periods of improved GDP, the sales volumes of their domestic markets similarly improve; when their GDPs are stagnant or declining. we expect those sales volumes to similarly be stagnant or decline. Demonstrating trade deficits are reduced during times of lesser national GDPs only indicates that less imports are sold within the nation’s domestic markets during those periods.
Regardless of a nation’s annual GDP, a positive trade balance increased it or a negative balance reduced it.
There are some production supporting goods and service products that are not fully reflected within the prices of final products because their entire costs were not passed on to the final producers; (for example, government provided infrastructure, reduced utility rates, government or university research and development may be provided to producers at less than their actual costs, although they all contribute to the producing nations’ GDPs.)
If entire production support is not reflected within nations’ globally traded goods’ prices, those nations’ trade balances are understated and trade deficit’s reductions or trade surpluses contributions to their nation’s GDPs are similarly understated.
Nations attract investment due primarily to expectations of investments’ security and rates of return rather than by the nation’s trade volumes or trade balances.
Respectfully, Supposn
“Trade balances effects upon their nation's GDPs.
Exports directly contribute and imports directly reduce their nation's balance of trade (i.e. net exports). A trade surplus is positive net balance of trade, and a trade deficit is a negative net balance of trade. Due to balance of trade being explicitly added to the calculation of their nation's gross domestic product using the expenditure method of calculating gross domestic production (i.e. GDP), trade surpluses are contributions and trade deficits are "drags" upon their nation's GDP”. …
… Refer to:
“Expenditure Method
http://www.bea.gov/methodologies/index.htm#national_meth
http://www.britannica.com/topic/gross-domestic-product”.
///////////////////////////////////////////////////////////////////////////////////////////////////////////
If a nation experienced an annual negative balance of global trade, (i.e. a trade deficit), that nation’s GDP was less than otherwise. A lesser GDP reflects upon, and is reflected upon by the nation’s lesser numbers of jobs during that same year. I’m unaware of any nation that enjoyed full employment while experiencing an annual trade deficit.
Proving trade deficits are beneficial or not detrimental to nations’ GDPs by statistical “proofs” are based upon specious reasoning.
[Within a nation’s markets, both their domestic and imported goods are sold. (We have no general rules applicable to aggregate types of goods and the proportional volumes between domestic and imports sold within each nation’s domestic markets during each of their markets differing conditions].
Generally, we expect that during a nation’s periods of improved GDP, the sales volumes of their domestic markets similarly improve; when their GDPs are stagnant or declining. we expect those sales volumes to similarly be stagnant or decline. Demonstrating trade deficits are reduced during times of lesser national GDPs only indicates that less imports are sold within the nation’s domestic markets during those periods.
Regardless of a nation’s annual GDP, a positive trade balance increased it or a negative balance reduced it.
There are some production supporting goods and service products that are not fully reflected within the prices of final products because their entire costs were not passed on to the final producers; (for example, government provided infrastructure, reduced utility rates, government or university research and development may be provided to producers at less than their actual costs, although they all contribute to the producing nations’ GDPs.)
If entire production support is not reflected within nations’ globally traded goods’ prices, those nations’ trade balances are understated and trade deficit’s reductions or trade surpluses contributions to their nation’s GDPs are similarly understated.
Nations attract investment due primarily to expectations of investments’ security and rates of return rather than by the nation’s trade volumes or trade balances.
Respectfully, Supposn