Jun 23, 2008

Gross Domestic Product

This map comes from some cool trade guy. US states have been replaced by countries with a similar level of GDP. Uzbekistan is Wyoming! Okay, his much talked about paper on how Chinese imports reduced inflation more for the poor than the rich in the US and hence reduced consumption (or real income) inequalities was a bit too conservative, as it omits the fact that if poor people consume different products (even though equivalent for economists) than the rich, it pisses them off.


IllegalCharacter said...

I wish that I knew which states were which!

cosimo said...
This comment has been removed by the author.
cosimo said...

I have not read the paper, but as Rodrik argued on his website http://rodrik.typepad.com/dani_rodriks_weblog/2007/04/does_free_trade.html, it is a common misperception to argue that trade lowers prices. We all know that it lowers the relative price of importables relative to exportables. If you consume relatively more importables, you are relatively better off, and viceversa (I guess the world "relative" is the most important in trade). I find it quite reasonable that poor Americans have a consumption basket more skewed towards importables, thereby their relative income increases w.r.t. rich Americans. The real question is: which products are American? Is I-pod a US product?

Pierre-Louis said...

This reasoning still makes no sense to me. The poor are not relatively better off when they cannot consume the goods the rich consume.
If this argument makes sense eocnomically, it is certainly detached from reality.
And yes the ipod is american, or at least definetly not Chinese..."Consider the example of iPod, which China assembles for Apple and exports to the United States and other countries. In trade statistics, the Chinese export value for a unit of a 30GB video model in 2006 was about $150. However, the best estimate of he value added attributable to producers in China was only $4, with the remaining value added coming from the United States, Japan, and other countries (Linden,
Kraemer, and Dedrick, 2007; and Varian, 2007). This is from HOW MUCH OF CHINESE EXPORTS IS REALLY MADE IN CHINA? ASSESSING DOMESTIC VALUE-ADDED WHEN PROCESSING TRADE IS PERVASIVE by Robert Koopman, Zhi Wang, Shang-Jin Wei, NBER Working Paper 14109