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Imports

Imports

BIBLIOGRAPHY

Imports are products or services shipped from producers in one country to users who are located in another country. While many import transactions involve a distinct buyer and seller, not all imports involve a market transaction, since some imports arise when a producer in one country ships its products to an associate or affiliate abroad.

The pattern of import demandwhether a country imports shoes, electronics, and oil, or some other bundle of goods and services, for exampleis partially determined by international differences in comparative advantage. Such differences are driven by cross-country differences in the relative endowments of capital, labor, and other resources or by cross-country differences in productivity across products. Import patterns are also influenced by customer desire for variety. Since expanding product varieties generally requires firms to make fixed-cost investments in the development of new varieties as well as the construction of new production facilities, producers in different countries specialize in distinct varieties of a product, and a limited range of varieties are available from each country. Thus, when individuals prefer a particular car, chocolate, or cheese that is not produced at home, they may import their preferred variety from the country that produces their preferred variety or brand.

Multinational firmsfirms whose plants, offices, and facilities are located in more than one countryplay an important role in the movement of imported goods, since multinational firms networks of overseas affiliates both

Multinational firms and the composition of U.S. goods trade in 2003: Each cell reports the percentage of trade conveyed by multinational companies (MNCs).
 MNC Trade Intrafirm MNC Trade
SOURCE: U.S. Bureau of Economic Analysis; Zeile 2005, Table 7; Mataloni 2005, Table 2; Nephew et al. 2005, Table A.
U.S. imports of goods   
U.S.owned nonbank MNCs37%15%
Majority-owned nonbank U.S. affiliates of foreign-owned firms28%23%
Total imports conveyed by MNC firms65%38%
U.S. exports of goods   
U.S.owned nonbank MNCs57%22%
Majority-owned nonbank U.S. affiliates of foreign-owned firms21%10%
Total exports conveyed by MNC firms78%32%

create and support international import transactions. To demonstrate the importance of multinational firms in the mediation of trade, Table 1 shows the percentage of U.S. import value in 2003 that involved a multinational firm at the shipping or receiving end of the transaction. For example, of the $1,257 billion in goods imported into the United States in 2003, 65 percent of the transactions involved multinational firms. Similarly, noting that U.S. exports become another countrys imports, 78 percent of the $725 billion of U.S. goods exported in 2003 involved multinational firms. In each of these examples, there were two potential avenues for engagement by multinational firms: the first avenue involved American-owned multinational firms, while the second involved foreign-owned affiliates operating in the United States.

The networks and presence of multinational firms were also notable in the conduct of services trade. Data from the U.S. Bureau of Economic Analysis show that other countries imported $769 billion of services from the United States in 2003, 62 percent of which involved the participation of U.S. service affiliates located overseas (Nephew, Koncz, Borga, and Mann 2005). Similarly, 63 percent of U.S. service imports in 2003 were conducted via the U.S.-based affiliates of foreign-owned firms (Nephew, Koncz, Borga, and Mann 2005).

While countries differ in the percentage of their imports handled by multinational firms, a portion of each countrys trade is likely to involve multinational firms. At the most basic level, firms often enter into operation as a multinational when they set up an overseas affiliate dedicated to the distribution of their products in foreign countries. Over time, the multinational firms presence in the foreign country may allow it to expand its foreign sales, and consequently the imports of the foreign country, since affiliate operations help firms to learn which of their products best match local tastes. If the local demand is sufficiently different and the foreign market is sufficiently large, the foreign affiliate may enable the multinational firm to tailor its products or services to the specific nature of foreign customer demands.

While the international networks of multinational firms often stimulate import flows, the operation of foreign affiliates may reduce import volumes. This outcome is especially likely when the multinational firm uses the output of its foreign subsidiary to serve its foreign customers, rather than having the foreign customers import the firms product. This type of substitution is especially likely when import tariffs are high, or international transportation costs are large, since the multinational firm maximizes its profits by producing in a foreign subsidiary, rather than engaging in international trade in its products. In contrast, when the cost of creating a new plant in a foreign location is large, the profit-maximizing multinational will be more inclined to produce in a more limited number of locations, or even a single location, thus requiring foreign customers to import their products. Since the cost of creating a new production facility does not vary dramatically across countries, this suggests that the displacement of imports by subsidiary production will be greatest for countries with large markets, where the variable cost savings due to lower transportation costs and tariffs more than compensate for the added fixed costs of building a new production plant overseas.

Production by a multinational firms overseas affiliates stimulates demand for imported intermediate inputs that are used in the foreign affiliates production. In many instances, these transactions give rise to intrafirm imports, where the multinational firm is both the shipper and recipient in the import transaction. For example, the production of cars in Toyotas U.S. assembly plants generates intrafirm imports when Toyotas U.S. assembly plants import engines from Toyota-owned production facilities in Japan. As Table 1 shows, 38 percent of U.S. imports and 32 percent of foreign imports of U.S. goods represented intrafirm transactions, which placed the same multinational firm as the shipper and receiver of the imported goods.

More broadly, increasing vertical specialization in international trade allows production to be decomposed across countries, as each country contributes to some elements of the production process. The international trade incentives for engaging in vertical specialization are identical to the motives driving the demand for imports of final products. However, in vertical production relationships, comparative advantage determines which stages of production are conducted in each country along the production process. For a broad range of countries, David Hummels, Jun Ishii, and Kei-Mu Yi (2001) estimate that vertical specialization, involving the trade of both affiliated and unaffiliated firms, represented 20 percent of all trade by 1990, and that the growth of vertical specialization was responsible for 30 percent of the growth in trade between 1970 and 1990. As tariff and transportation costs continue to decline, and technologies for international communication and coordination improve, vertical specialization imports should grow further yet.

SEE ALSO Balance of Payments; Balance of Trade; Exchange Rates; Exports; Trade

BIBLIOGRAPHY

Hummels, David, Jun Ishii, and Kei-Mu Yi. 2001. The Nature and Growth of Vertical Specialization in World Trade. Journal of International Economics 54 (1): 7596.

Markusen, James R. 2002. Multinational Firms and the Theory of International Trade. Cambridge, MA: MIT Press.

Mataloni, Raymond J., Jr. 2005. U.S. Multinational Companies Operations in 2003. Survey of Current Business 85 (7): 929. http://www.bea.gov/bea/ARTICLES/2005/07July/0705_MNCs.pdf.

Nephew, Erin, Jennifer Koncz, Maria Borga, and Michael Mann. 2005. U.S. International Services: Cross-Border Trade in 2004 and Sales Through Affiliates in 2003. Survey of Current Business 85 (10): 2577. http://www.bea.gov/bea/ARTICLES/2005/10October/1005_xborder.pdf.

Yi, Kei-Mu. 2003. Can Vertical Specialization Explain the Growth of World Trade? Journal of Political Economy 111 (1): 52102.

Zeile, William J. 2005. U.S. Affiliates of Foreign Companies Operations in 2003. Survey of Current Business 85 (8): 198214. http://www.bea.gov/bea/ARTICLES/2005/08August/0805_Foreign_WEB.pdf.

Deborah L. Swenson

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Imports

IMPORTS


Imports are goods and services that are brought from the country in which they are produced into another country for use by its people. Examples of goods that have been imported into the United States include oil from the Middle East, cars from Japan, wine from France, and bananas and coffee from South America. There are thousands of other imported goods, ranging from raw materials to finished products like computers, clothing, and jet aircraft.

Imports play an important role in the economy of virtually all modern industrial nations. In many leading industrial nations, 20 percent or more of all money spent was used for buying something produced in another country. The United States is one of the world's leading importing countries, which enables citizens to buy a wide range of goods and services.

Imports give citizens a broader range of products to choose, but they can be a source of political anxiety as well. Laborers who rely on sales of domestic-made products for job protection may complain that their fellow citizens are spending money on foreign-made products when similar products may be produced domestically. The higher the amount of imports, the greater the number of jobs that may be lost to foreign workers. In the 1970s for example, U.S. auto and steelworkers were losing jobs while record levels of foreign-made cars and steel were being imported to the United States. This anxiety led to calls for protectionist legislationlaws that restricted the flow of goods into a nation. Another source of anxiety from imports is the fear that one nation may develop too great a dependence on foreign goods. In the 1970s for example, Middle Eastern oil producers were able to create widespread shortages of gasoline and other energy products in the United States by temporarily halting oil shipments to the United States.

See also: Exports, OPEC Oil Embargo, Protectionism

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import

im·port • v. / imˈpôrt/ [tr.] 1. bring (goods or services) into a country from abroad for sale: Japan's reluctance to import more cars. ∎  introduce (an idea) from a different place or context: new beliefs were often imported by sailors. ∎  Comput. transfer (data) into a file or document. 2. archaic indicate or signify: having thus seen, what is imported in a Man's trusting his Heart. ∎  express or make known: they passed a resolution importing that they relied on His Majesty's gracious promise. • n. / ˈimˌpôrt/ 1. (usu. imports) a commodity, article, or service brought in from abroad for sale. ∎  (imports) sales of goods or services brought in from abroad, or the revenue from such sales: this surplus pushes up the yen, which ought to boost imports. ∎  the action or process of importing goods or services: the import of live cattle from Canada. 2. [in sing.] the meaning or significance of something, esp. when not directly stated: the import of her message is clear. ∎  great significance; importance: pronouncements of world-shaking import. DERIVATIVES: im·port·a·ble adj. im·por·ta·tion / ˌimpôrˈtāshən/ n. im·port·er n.

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import

import
A. carry as its purport, signify, imply XV; be of significance or importance (to) XVI;

B. bring in from outside XVI. — L. importāre; in A in its med. sense of ‘imply, mean’; in B in the orig. sense ‘carry in’, f. IM-1 + portāre bring, carry, rel. to portus PORT1.
Hence sb. A. purport, significance XVI; B. commodity imported XVII. So importance XVI. — (O)F. — medL. importantia. important XVI. — F. — medL. importāns, -ant-.

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import

importabort, apport, assort, athwart, aught, besought, bethought, bort, bought, brought, caught, cavort, comport, consort, contort, Cort, court, distraught, escort, exhort, export, extort, fort, fought, fraught, import, methought, misreport, mort, naught, nought, Oort, ought, outfought, port, Porte, purport, quart, rort, short, snort, sort, sought, sport, support, swart, taught, taut, thought, thwart, tort, transport, wart, wrought •cohort • backcourt • Port Harcourt •forecourt • onslaught • dreadnought •Connacht • aeronaut • Argonaut •juggernaut • cosmonaut • astronaut •aquanaut • davenport • carport •passport • airport •Freeport, seaport •Shreveport •heliport, teleport •Stockport • outport • Coalport •spoilsport •Newport, viewport •hoverport •forethought, malice aforethought •afterthought • worrywart

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