What is an ‘Import’
An import is a good or service brought into one country from another. The word “import” is derived from the word “port,” since goods are often shipped via boat to foreign countries. Along with exports, imports form the backbone of international trade; the higher the value of imports entering a country, compared to the value of exports, the more negative that country’s balance of trade becomes.
Explaining ‘Import’
Countries are most likely to import goods that domestic industries cannot produce as efficiently or cheaply but may also import raw materials or commodities that are not available within its borders. For example, many countries have to import oil because they cannot produce it domestically or cannot produce enough of it to meet demand. Free trade agreements and tariff schedules often dictate what goods and materials are less expensive to import. With globalization and the increasing prevalence of free trade agreements between the United States and other countries and trading blocks, U.S. imports have increased from $473 billion in 1989 to $2.24 trillion in 2015.
What Affects Imports
The largest trading partners with the United States include China, Canada and Mexico. Two of these countries are involved in the North American Free Trade Agreement (NAFTA) that was implemented in 1994 and created one of the largest free trade zones, at the time, in the world. This allowed for free movement of goods and materials within the host nations of the United States, Canada and Mexico with a few exceptions.
Large Imports Reduce Manufacturing
Free trade agreements and the reliance on imports from cheaper labor locales are responsible for a large portion of the decline in manufacturing jobs. Free trade opens up the ability to import goods and materials from cheaper production zones in the world and reduces the reliance on goods made locally. This is evident by the collapse of manufacturing jobs during the period of 2000 to 2007, and was further exacerbated by the Great Recession and slow recovery afterward.
Imports vs. Exports
The United States has experienced a trade deficit since 1975, the last year in which it saw a trade surplus. Economists and policy analysts are split on the positive and negative impacts of imports. Continued imports mean reliance on other sources for much of U.S. consumer product demands, while it also enhances the quality of life with cheaper goods. Economists feel these cheap imports over domestic manufacturing have also helped prevent rampant inflation.
Further Reading
- The economics of arms imports after the end of the cold war – www.tandfonline.com [PDF]
- Cointegration, error correction representation and the import demand function with implications in international finance and accounting research – link.springer.com [PDF]
- The public finance of a protective tariff: The case of an oil import fee – www.jstor.org [PDF]
- Tourism, capital good imports and economic growth: theory and evidence for Spain – journals.sagepub.com [PDF]
- The dynamic of financial development, imports, foreign direct investment and economic growth: cointegration and causality analysis in Pakistan – journals.sagepub.com [PDF]
- The Influence of Fluctuation of Real RMB Exchange Rate to Chinese Import and Export: 1994—2003 – en.cnki.com.cn [PDF]
- The Impacts of Exchange Rate and Import Price Fluctuation on Domestic Prices [J] – en.cnki.com.cn [PDF]
- The bounds test approach for cointegration and causality between financial development, international trade and economic growth: the case of Cyprus – www.tandfonline.com [PDF]
- Is there an export or import-led productivity growth in rapidly developing Asian countries? A multivariate VAR analysis – www.tandfonline.com [PDF]
