Number of the Week: Who Gets Credit for iPhone Trade? ... $6.83 Billion: Estimated amount that iPhone sales added to the U.S.-China trade deficit in 2011. ... Every iPhone sold in the U.S. adds to the country’s trade deficit with China, but the official calculations may overstate the Asian nation’s contribution. Now statisticians are trying to find a better way of tracking international trade.
The iPhone provides a good example of the problems with the way trade is currently calculated. The Apple device features hardware from all over the world, but because it’s manufactured in China that country gets credit for the entire wholesale export cost.The piece cites various economists who have found that,
... each iPhone sold in the U.S. adds $229 to the U.S.-China deficit. Based on 2011 cellphone activations from AT&T, Verizon and Sprint, Apple sold around 30 million iPhones in the U.S. last year — accounting for about $6.83 billion of the U.S.’s $282 billion 2011 trade deficit with China.
But the researchers note that such estimates overstate China’s contribution. Though the iPhone is assembled in China, most of its component parts come from elsewhere.Where to start? Eager (lusting?) iPad buyers are all over the news. Apple's record stock valuations are a favorite topic among investors. Tech reporters are besides themselves with admiration for the device, which many have had in their hands for about a day. NPR admits that its This American Life report about nasty tech factories in Asia was a fabrication.
The iPhone is just one example. This same phenomenon is happening all over the world in products ranging from cars to children’s toys. In an attempt to better gauge which countries are benefiting or losing the most through trade, the Organization for Economic Co-operation and Development and the World Trade Organization announced that they will be working on a project that identifies where value-added flows are coming from. (italics mine)
A better understanding of trade flows should help guide policy makers to manage economic shocks, arbitrate trade disputes and identify global imbalances. (italics mine).
I get annoyed when my students worry about these "imbalances". But this comes from the WSJ and cites the work of real economists. What hope is there when these people peddle mercantalism? What hope when serious people ignore the fundamental source of our material wealth?