views updated May 18 2018



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 TradeIntrafirm 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


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.

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.

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.

Deborah L. Swenson


views updated May 23 2018


What It Means

Imports are any foreign-made goods and services that are brought into a country to be sold. The United States imports many different types of goods from other countries, including electronics, automobiles, wine, clothing, and diamonds. Imports are the opposite of exports, which are the goods and services transported out of a country and sold abroad.

When a country imports foreign goods and services into its markets for domestic consumers to purchase, it can benefit its economy in two important ways. First, it is able to broaden the range of goods and services it offers to its consumers. For example, when the United States imports tires made in the Czech Republic, it provides another choice of tire for American consumers. Second, if the goods or services bought from foreign producers have been manufactured at low costs, the importing country can potentially enable its citizens to pay lower prices for those goods. For instance, if Indonesian clothing factories can make jackets at a lower cost than American factories can, and they are offered to U.S. consumers through clothing retailers, the consumers will have a lower-priced alternative.

When a country chooses to import goods, it also benefits foreign producers because it gives them another market for their products. For example, car manufacturers in Japan make many types of automobiles to be sold in other countries. In 2005 Japan exported more than 5 million vehicles, the total value of which was about ¥10.5 trillion (about $94 billion).

In any given month the United States imports goods and services from Canada, France, Germany, Mexico, Japan, and other countries. Meanwhile, many countries around the world import goods and services manufactured in the United States. The diversity of goods transported across borders has increased dramatically since the Internet has become a widely used communication and marketing tool. The phenomenon known as globalization means that goods and services produced in one country are increasingly available in other parts of the world.

The branch of economics known as international trade studies the exchange of commercial goods across international boundaries. The amount that a country imports and exports plays a crucial role in the overall economic health of that country. International trade makes up a substantial part of what is known as a country’s gross domestic product, or GDP. GDP is a measurement of the market value of all final goods and services produced in a country within a specific time span (typically one year).

When Did It Begin

Importing has taken place since ancient times, when the first long-distance travelers began engaging in trade. An example of an ancient system promoting trade was the Silk Road, a 5,000-mile-long network of interconnected overland routes through southern Asia that was used from 200 bc to 900 ad and connected China with regions west of it (including India, Persia, and the Mediterranean). Traders used the Silk Road to transport Chinese products, such as silks, porcelain, spices, gunpowder, and paper, to the West, and to transport Western products, such as silver, to China.

Importing increased in the sixteenth and seventeenth centuries. At first, importing such goods as valuable raw materials was only an option for a relatively small number of consumers, those who could afford to pay the high costs of shipping. The Dutch East India Company, a Netherlands-based monopoly that was instrumental in colonizing Southeast Asia and Africa, was formed in 1602 and developed its business and trade for almost 200 years. One of the primary goods Dutch East India ships brought to Europe was exotic spices. But as trade expanded and became more competitive, countries such as the Netherlands lost their isolated control over trade. Once they had begun trading more freely with one another, countries developed systems to regulate the flow of goods across borders.

Changes in political and economic stability have affected the openness of trade between countries. For example, the presence of trade barriers that restricted free trade between European nations was widely believed to have been a principal cause of World War II (1939–45). To prevent the reoccurrence of such problems, an international coalition of more than 40 countries adopted an economic structure called the Bretton Woods system in 1946. In addition to stabilizing rates of currency exchange, it established rules to end trade barriers.

More Detailed Information

When goods and materials arrive at the borders of the country importing them, they must pass through the customs authority in that country. Every country’s customs agency oversees the collection of customs taxes, which are sometimes called duties. The customs agency also oversees the flow of animals, people, and goods into the country. If the import (or export) of certain goods is restricted or forbidden, it is the responsibility of the customs authority to enforce the laws and forbid goods to enter the country.

An import duty, often called a tariff, is a tax levied (charged) on certain goods when they are imported into a country. Usually the tariff is a percentage of the declared value of the good. It serves to control the number of foreign products that can enter the domestic market. For example, if the U.S. government puts a 20 percent tariff on imported Peruvian llamas, and $50 million worth of llamas are imported in a year, the customs agency will collect $10 million. Import tariffs are the second-largest source of revenue for the U.S. government (after income taxes). It collects $20 billion a year in tariff revenue.

The government sets the rate at which tariffs are charged and controls the revenue they generate. If the government determines that it needs to regulate the amount or number of a particular import, it sets a limit on that import; this limit is known as an import quota. Import quotas are generally less popular than tariffs because quotas can be withheld from some importers (while the quota is being met) and enforced on other importers (after the quota has been met). If set at unreasonable levels, both tariffs and import quotas will result in escalations of smuggling. For example, if the tariff on Peruvian llamas is set at 90 percent, then those producing the llamas will be more likely to avoid bringing the animals into the country through the regular customs process and instead use illegal methods.

Balance of trade is the term used to describe the difference between the monetary value of exports and imports in an economy over a measurable period of time. When a country is exporting more than it is importing and the balance of trade is positive, it is known a trade surplus. When a country is importing more than it is exporting and the balance of trade is negative, it is known as a trade deficit.

A country’s balance of trade can be influenced by various factors, including the strength or weakness of its currency in relation to those of the countries with which it trades. For example, if the U.S. dollar is weak (meaning it has a lower value compared to other currencies), that weakness makes goods produced in other countries relatively expensive for American consumers. A country’s balance of trade is also affected by any advantage the country might have in producing particular goods or services. For example, clothing is often imported from China because Chinese factories can manufacture it at a lower cost. A third factor influencing a country’s balance of trade is how well the country’s production of goods meets its residents’ demand for those goods. If the production level of a particular good or service cannot satisfy the consumer demand for it, the country will import more than it exports and run the likelihood of encountering a trade deficit for that good or service.

Recent Trends

An expansion in the trade of goods and services between nations after World War II (1939–45) built economic connections between nations and increased the level of imports and exports to countries around the globe. The General Agreement on Tariffs and Trade (GATT) was signed in 1948 by 23 nations, including the United States. Its purpose was to encourage trade agreements among member nations that supported the fair treatment of resources (such as labor and the environment); it officially laid out the terms and conditions for open trade. GATT was replaced by the World Trade Organization (WTO) in 1995. One hundred and twenty-five nations were members, governing 90 percent of world trade and laying the foundation for one worldwide system of economics.

As a result of the WTO and other policies, rates of both importing and exporting began accelerating dramatically in the 1990s. This was a result of the trend in the economies around the globe to move away from functioning as distinct national economic markets and toward operating as one huge global market. This trend is known as globalization. Lower trade barriers have enabled the increased interconnectedness and interdependence between markets and countries.

The North American Free Trade Agreement (NAFTA) is an agreement among Canada, the United States, and Mexico that went into effect on January 1, 1994. When NAFTA was passed, it called for the immediate removal of the taxes that had been imposed on half of all U.S. goods shipped to Mexico and Canada. It also laid out a plan for a gradual removal of other tariffs over approximately 14 years. NAFTA caused trade between the United States, Canada, and Mexico to increase dramatically. In fact, trade between the United States and Mexico has doubled since NAFTA went into effect.


views updated May 23 2018

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·por·ta·tion / ˌimpôrˈtāshən/·port·er n.


views updated Jun 11 2018


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


views updated May 23 2018

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-.