[OPE-L] Net value of US imports in perspective

[Jurriaan Bendien <adsl675281@xxxxxxxxxx>]

Previously I did a quick calculation of US net gains from foreign trade in
goods in 2005 (value of imports of goods less value of exports of goods).
These are big numbers, and the mind searches for a way to put them in some
kind of proportion, i.e. what such a magnitude means.

It occurred to me another way for comparison of magnitudes would be to say
that this net gain value (for 2005, $767.5 billion current dollars) is
approximately the same as the current dollar value of the GDP of Mexico (or
the Russian Federation, or India).

So you could say that, every year nowadays, the net gain of the US from
foreign trade in goods, in current dollar terms, is similar to the dollar
value of total GDP of Mexico (nearest) or of the GDP of the Russian
Federation, or the GDP of India. Every year, chomp! there goes Mexico's GDP
gulped into the USA.

Of course, I could not propose such a statistical comparison without
qualifications - firstly, the dollar value GDP referred to (I am using World
Bank figures cited here
http://siteresources.worldbank.org/DATASTATISTICS/Resources/GDP.pdf), is at
nominal exchange rates, not at purchasing power parity. At ppp, India's GDP
gets 5 times larger for example. We're talking a chunk of capital value in
US dollar terms. Second, GDP refers to the total value of net output of
goods AND services.  As regards foreign trade in services, the US Census
2005 figures are: exports = $906 billion (Census basis; the BOP estimates
are very similar) and imports = $1,673 billion, the difference being $924
billion more import of services than export of them (Report U.S.
International Trade in Goods and Services: Annual Report for 2005, Bureau of
the Census, Foreign Trade Division).

But how about Euroland (the EU15)? The 2005 value of imports of goods cited
by Eurostat (http://epp.eurostat.ec.europa.eu) = 1,242 billion euro, and
exports of goods = 1,173 billion euro, suggesting a net gain of "only" 69
billion euro. This is obviously vastly less than the US net gain.

As regards Japan (Statistics Office), 2004 exports of goods = $612 billion
and imports = $492 billion yen, so then you have $120 billion more exports
of goods than imports of them
(http://www.stat.go.jp/english/data/figures/index.htm#l) (I am assuming that
the Japanese yen = about $0.01 dollar). No net gain from imports of goods
here.

Thus, you can see the basis of the popular perception that US domestic
demand, fueled by real estate inflation, "drives the world economy". That
perception is obviously not very accurate (if we consider total volumes of
trade and aggregate demand by region), it is just that the net gain of the
US from foreign trade in goods AND services is vastly larger than for Europe
and Japan. Henry C. K. Liu might say, "with US dollar hegemony, the USA
sucks in far more real wealth, than it spits out".

The way I recall Mr Bush put it (?) is "well, people just want to invest in
the USA, they want to live here" etc., i.e. I cannot help it, if we happen
to be popular. Then why all this "anti-American" feeling? There must be a
snag somewhere...

Jurriaan