How iPhone Widens the US Trade Deficits with the PRC?
AbstractIIn this paper, we use the iPhone as a case to show that even high-tech products invented by American companies will not increase the US exports, but to the contrary exacerbate the US trade deficits. The iPhone contributed US$1.9 billion about 0.8% of the US trade deficit with PRC in 2009. Unprecedented globalization, well organized global production networks, repaid development of cross-country production fragmentation, and low transportation costs all contribute to rational firms such as Apple making business decisions that contributed directly to the US trade deficit. Global production networks and highly specialized production processes apparently reverse conventional trade patterns so that developing countries, such as PRC, export high-tech goods?like the iPhone while industrialized countries, such as the US, import high-tech goods they themselves invented. In addition, conventional trade statistics greatly inflate bilateral trade deficits between a country used as export-platform by multinational firms and its destination countries. Based on the value-added approach, the iphone trade would generate US$48 million trade surplus for the US.
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Bibliographic InfoPaper provided by National Graduate Institute for Policy Studies in its series GRIPS Discussion Papers with number 10-21.
Length: 13 pages
Date of creation: Nov 2010
Date of revision:
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- L'iPhone dÃ©grade la balance commerciale des Etats-Unis !
by email@example.com (Le Captain') in Captain Economics on 2012-09-04 00:00:00
- Robert Stehrer, 2012. "Trade in Value Added and the Valued Added in Trade," wiiw Working Papers 81, The Vienna Institute for International Economic Studies, wiiw.
- Xing, Yuqing, 2012. "The People’s Republic of China’s High-tech Exports: Myth and Reality," ADBI Working Papers 357, Asian Development Bank Institute.
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