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How iPhone Widens the US Trade Deficits with the PRC?

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  • Yuqing Xing

    (National Graduate Institute for Policy Studies)

  • Neal Detert

    (Asian Development Bank Institute)

Abstract

IIn 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 Info

Paper provided by National Graduate Institute for Policy Studies in its series GRIPS Discussion Papers with number 10-21.

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Length: 13 pages
Date of creation: Nov 2010
Date of revision:
Handle: RePEc:ngi:dpaper:10-21

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  1. L'iPhone dégrade la balance commerciale des Etats-Unis !
    by contact@captaineconomics.fr (Le Captain') in Captain Economics on 2012-09-04 00:00:00
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Cited by:
  1. Yao, Yang, 2014. "The Chinese Growth Miracle," Handbook of Economic Growth, Elsevier, in: Handbook of Economic Growth, edition 1, volume 2, chapter 7, pages 943-1031 Elsevier.
  2. Yuqing Xing & Manisha Pradhananga, 2013. "How Important is Exports and FDI for China's Economic Growth?," GRIPS Discussion Papers, National Graduate Institute for Policy Studies 13-04, National Graduate Institute for Policy Studies.
  3. Xiao Jiang & William Milberg, 2013. "Capturing the jobs from globalization: trade and employment in global value chains," Brooks World Poverty Institute Working Paper Series, BWPI, The University of Manchester ctg-2013-30, BWPI, The University of Manchester.
  4. Xiao Jiang & William Milberg, 2012. "Vertical specialization and industrial upgrading: a preliminary note," Brooks World Poverty Institute Working Paper Series, BWPI, The University of Manchester ctg-2012-10, BWPI, The University of Manchester.
  5. Xing, Yuqing, 2012. "The People’s Republic of China’s High-tech Exports: Myth and Reality," ADBI Working Papers, Asian Development Bank Institute 357, Asian Development Bank Institute.
  6. Robert Stehrer, 2012. "Trade in Value Added and the Valued Added in Trade," wiiw Working Papers, The Vienna Institute for International Economic Studies, wiiw 81, The Vienna Institute for International Economic Studies, wiiw.
  7. Xiao, Yangao & Tylecote, Andrew & Liu, Jiajia, 2013. "Why not greater catch-up by Chinese firms? The impact of IPR, corporate governance and technology intensity on late-comer strategies," Research Policy, Elsevier, Elsevier, vol. 42(3), pages 749-764.

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