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Official Trade Data: Still Fit for Purpose?

Brian Sturgess - November 2012

The forthcoming issue of the World Economics Journal has the special theme of international trade statistics, their accuracy and their fitness for purpose. Even when well collected it has become increasingly obvious that merchandise and services trade data collated on a nation state basis ignore many economic realities. The development of global supply chains means that goods and services can cross borders many times, but conventional trade statistics assigning imports and exports on a dual basis do not reflect this complex reality and ignore the contribution of producers in many countries often including the importing nation to final value. 

This problem has been popularised as the Apple ‘Made in China’ question. Conventional trade statistics consider the iPhone a Chinese export to the US, but the product is entirely designed and owned by a US company, and is made largely of parts produced in several Asian and European countries. China's contribution is the last step – assembling and shipping the phones, and while the entire US$178.96 estimated wholesale cost of the shipped phone is credited to China, the value of the work performed in China has been recently estimated by the Asian Development Bank at 3.6%, or just US$6.50, of the total.[1] This matters because international trade statistics are used as evidence of global trade imbalances and form the basis of potentially misguided policies aimed at their correction. 

That something is wrong with how we measure international trade is evidenced by the fact that according to the IMF’s World Economic Outlook the world exported US$331 billion more than it imported in 2010 and it forecasts that the global current account s...

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