The costs and benefits of producing or importing:
The expenditure formula itself only reduces or increases GDP by the nation's net trade balance which is based upon the price value of globally traded products. But there's often additional production supporting goods and services that are not fully paid for by product producers, and are not reflected within the products price valuation.
For example, it's not unusual for governments and universities to boost local economies by providing producers with valuable research and development at lesser than market value or costs; government infrastructure that favors an important producer or industries; training and education tailored to serve a particular company or industry. These all increase their nation's GDP but if they are not reflected within the prices of exported products, exports full contributions to the nation's GDP are not attributed to the nation's global trade.
OK, national trade surpluses are understated, but doesn't that mean the importing nation's getting a bargain; they're getting more than they paid for? Well yes and no.
The exporting nation is the nation that earned the benefits of production. It is their nation that gains the knowledge and experience derived from using the tools and manipulating the materials of production. It is their universities that produced the research and development. It is their nation that built and improved the infrastructures that supported their producers and also serves others.
The reduced costs of imported products rather than domestic production costs are often at some costs to our government. To the extent laid-off workers previous incomes cannot be sustained, the enterprise's costs savings are often to some extent reflected by government's reduced tax revenues and increase unemployment costs.
When a service enterprise is displaced, other enterprises are often established elsewhere in the nation. Production of goods very often do not require close proximity to the customer and are often outsourced to lower wage rate nations.
It's unusual for a commercial enterprise not to require some products or services of other enterprises. Production moved beyond our borders, are usually supported by foreign enterprises. Even if a production supporting enterprise have other customer and/or serves other industries, their lesser production or sales volumes may increase their per-unit costs to the extent that they too cannot continue functioning within the nation.
There are benefits and costs of production; there are far fewer benefits and significant costs for nations that do not produce.
Respectfully, Supposn
The expenditure formula itself only reduces or increases GDP by the nation's net trade balance which is based upon the price value of globally traded products. But there's often additional production supporting goods and services that are not fully paid for by product producers, and are not reflected within the products price valuation.
For example, it's not unusual for governments and universities to boost local economies by providing producers with valuable research and development at lesser than market value or costs; government infrastructure that favors an important producer or industries; training and education tailored to serve a particular company or industry. These all increase their nation's GDP but if they are not reflected within the prices of exported products, exports full contributions to the nation's GDP are not attributed to the nation's global trade.
OK, national trade surpluses are understated, but doesn't that mean the importing nation's getting a bargain; they're getting more than they paid for? Well yes and no.
The exporting nation is the nation that earned the benefits of production. It is their nation that gains the knowledge and experience derived from using the tools and manipulating the materials of production. It is their universities that produced the research and development. It is their nation that built and improved the infrastructures that supported their producers and also serves others.
The reduced costs of imported products rather than domestic production costs are often at some costs to our government. To the extent laid-off workers previous incomes cannot be sustained, the enterprise's costs savings are often to some extent reflected by government's reduced tax revenues and increase unemployment costs.
When a service enterprise is displaced, other enterprises are often established elsewhere in the nation. Production of goods very often do not require close proximity to the customer and are often outsourced to lower wage rate nations.
It's unusual for a commercial enterprise not to require some products or services of other enterprises. Production moved beyond our borders, are usually supported by foreign enterprises. Even if a production supporting enterprise have other customer and/or serves other industries, their lesser production or sales volumes may increase their per-unit costs to the extent that they too cannot continue functioning within the nation.
There are benefits and costs of production; there are far fewer benefits and significant costs for nations that do not produce.
Respectfully, Supposn