balance of trade

The difference in value between the total exports and total imports of a nation during a specific period of time.

The largest component of a country's balance of payments. It is the difference between exports and imports. Debit items include imports, foreign aid, domestic spending abroad and domestic investments abroad. Credit items include exports, foreign spending in the domestic economy and foreign investments in the domestic economy. A country has a trade deficit if it imports more than it exports; the opposite scenario is a trade surplus.

Investopedia Says:
The balance of trade is one of the most misunderstood indicators of the U.S. economy. For example, many people believe that a trade deficit is a bad thing. However, whether a trade deficit is bad thing or not is relative to the business cycle and economy. In a recession, countries like to export more, creating jobs and demand. In a strong expansion, countries like to import more, providing price competition, which limits inflation and, without increasing prices, provides goods beyond the economy's ability to meet supply. Thus, a trade deficit is not a good thing during a recession but may help during an expansion.

Related Links:
Countries track money coming in and going out through something called the balance of payments. Learn more here. What Is The Balance Of Payments?
Learn how a country's current account balance reflects the country's economic health. Understanding The Current Account In The Balance Of Payments
Find out what it means when more funds are exiting than entering a nation. Current Account Deficits
The WTO sets the global rules of trade. But what exactly does it do and why do so many oppose it? What Is The World Trade Organization?

Net difference over a period of time between the value of a country's imports and exports of merchandise. Movable goods such as automobiles, foodstuffs, and apparel are included in the balance of trade; payments abroad for services and for tourism are not. When a country exports more than it imports, it is said to have a favorable balance of trade; when imports predominate the balance is called unfavorable. The balance of trade should be viewed in the context of the country's entire international economic position, however. For example, a country may consistently have an unfavorable balance of trade that is offset by considerable exports of services; this country would be judged to have a good international economic position. See also Balance of Payments.

Even though the United States has many natural resources and the ways and means to use them in manufacturing, it cannot provide its people with all that they want or need. For this reason, the United States participates in international trade, which is the exchange of goods and services with other nations. Without international trade, goods would either cost more or not be available.

Throughout the world, there are substantial differences in the natural resources available. For example, Canada, with its huge forests, is a major producer of lumber and paper products; the Middle East has rich oil reserves; and the coastal regions of the world are leaders in the fishing industry.

Without international trade, each country would have to be totally self-sufficient. Each would have to make do only with what it could produce on its own. This would be the same as an individual being totally self-sufficient, providing all goods and services, such as clothing and food, that would fulfill all wants and needs. International trade allows each nation to specialize in the production of those goods it can produce most efficiently. Specialization, in turn, causes total production to be greater than it would be if each nation tried to be self-sufficient.

Goods and services sold to other countries are called exports; goods and services bought from other countries are called imports. The U.S. Bureau of the Census, Foreign Trade Division, indicates that U.S. exports include such goods as corn, wheat, soybeans, plastics, iron and steel products, chemicals, and machinery, while imports include such goods as chemicals, crude oil, machinery, diamonds, and coffee.

The balance of trade is the difference between the dollar amount of exports and the dollar amount of imports. The United States has many trade partners. Table 1 shows the U.S. balance of trade with three selected nations.

In order to have a trade surplus, a country must export (sell) more than it imports (buys). The opposite of a trade surplus is a trade deficit. This occurs when a country imports (buys) more than it exports (sells). As can be seen from Table 1, a country can have a trade surplus with one country and a trade deficit with another. The Bureau of the Census records indicate that for the month of November 1998 the United States had a trade surplus with such countries as Saudi Arabia, the Netherlands, Australia, and Brazil. During the same month, the United States had a

United States Trade with Selected Countries, 1998

trade deficit with such countries as Japan, China, Canada, and Mexico.

The Bureau of the Census also reports that the United States experienced its first trade deficit (total of all exports minus total of all imports) of the twentieth century in 1971, with a trade deficit of approximately $1.5 billion. A record high trade deficit occurred in 1998, when imports exceeded exports by approximately $230 billion. Table 2 shows the U.S. balance of trade for the years 1960 through 1998. As can be easily seen in the table, the U.S. trade deficit continues to increase.

As stated earlier, total production increases when a nation specializes in the production of those goods it can produce most efficiently instead of attempting to be totally self-sufficient. Allen Smith (1986), states that "a country that can produce a product more efficiently than another country is said to have an absolute advantage in the production of that product" (p. 315). When a nation can use fewer resources to produce the same amount of a product, it has an absolute advantage in the production of that product. For example, Brazil has an absolute advantage over the United States in the production of coffee, and the Middle East has an absolute advantage over the United States in the production of crude oil. Because of its ideal climate, Ecuador can produce bananas more efficiently than the United States; therefore, Ecuador has an absolute advantage over the United States in the production of bananas. However, the United States has an absolute advantage over Ecuador in the production of most products. Both nations benefit by trading those products that each nation can produce more efficiently. Nations usually will not trade with other nations unless there are gains to be made by each nation. However, the gains made will not necessarily be equal.

Smith (1986) also states that "any time a nation has an absolute advantage in the production of two goods or services, the nation has a comparative advantage in the production of that good or service where the absolute advantage is greater" (p. 315). In other words, if a nation has a two-to-one absolute advantage in the production of one product and a three-to-one absolute advantage in the production of another product, the comparative advantage lies with the product with the larger ratio. Smith (1986) also states that "even though a nation has an absolute disadvantage in the production of two products, it has a comparative advantage in the production of that product in which the absolute disadvantage is less" (p. 316). For example, even though a nation has a disadvantage in the production of a certain product, if that disadvantage is small compared to its disadvantage in the production of other products, it still has a comparative advantage with the former product.

When the United States buys goods from another country, it usually pays for the goods in the currency of the exporting country. There are many transactions that involve the exchange of money between nations. The balance of payments is an accounting record of the difference

Trade Balance
Goods on a Census Basis
VALUE IN MILLIONS OF DOLLARS
1960 THRU 1998

between the amount of money that a country receives and the amount of money that it pays out during a year. A positive balance of payments means that a country receives more money in a year than it pays out. Likewise, a negative balance of payments occurs when a country pays out more money than it takes in. Any transaction that involves payments between countries is included in the balance of payments. The largest component of the balance of payments is the balance of trade, but many more financial transactions are included, such as foreign aid to other nations, government support of military personnel stationed in other nations, and money spent by tourists.

The importing and exporting of goods and services are controlled by the U.S. government. Three of the most common barriers to trade are tariffs, import quotas, and embargoes. A tariff is a tax imposed by the government on imported goods. An import quota places a limit on the amount of a product that may be imported or exported during a given period of time. An embargo occurs when the government halts the import or export of a certain product.

Bibliography

Gottheil, Fred M., and Wishart, David. (1997). Principles of Economics with Study Guide. Cincinnati: South-Western College Publishing.

Smith, Allen W. (1986). Understanding Economics. New York: Random House.

U.S. Bureau of the Census, Foreign Trade Division. http://www.census.gov/foreign-trade/site1/1998.

[Article by: LISA S. HUDDLESTUN]

For more information on balance of trade, visit Britannica.com.

Trade balances are the financial flows that arise from trade in goods and services and unilateral transfers between countries. These financial flows constitute a portion of a country's current account. The balance of trade is measured by the dollar value of payments and receipts for goods and services.

Overview

From 1815 to 1934, U.S. governments generally enacted policies that limited imports of manufactured goods, in the interest of protecting domestic producers. Trade balances were generally negative until the United States emerged as an industrial power in the 1870s. Notwithstanding the improving competitive position of U.S. manufacturers, reflected in surging trade surpluses, high tariffs remained in place until the Smoot-Hawley tariff of 1930 brought protectionism into disrepute.

The administration of President Franklin D. Roosevelt adopted a freer trade position with the passage of the Reciprocal Trade Agreements Act in 1934. In the context of growing surpluses in the trade of merchandise goods, the United States played a leading role in liberalizing trade after World War II (1939–1945). Persistent and growing trade deficits from the 1970s on prompted successive administrations in Washington to pursue "strategic" trade policies that retreated selectively from the free trade position of the early postwar period. Despite the concessions to so-called fair trade, U.S. governments remained biased toward freer trade, despite the large and growing trade deficits of the 1980s and 1990s.

Economists generally frown on the idea that trade surpluses are better than deficits and believe that policies that suppress imports invariably reduce exports in the long run. With the growth of the trade deficit, concern over jobs and the means to service trade balances have prompted calls for policy changes that redress the imbalance among exports and imports. At the end of the twentieth century, however, public policy expressed little concern regarding the trade deficit.

From Colonialism to World War I

The thirteen American colonies ran persistent trade deficits with Great Britain from 1721 to 1772. Surpluses with other countries reduced the overall deficit somewhat. Yet from 1768 to 1772, colonial exports totaled £2.8 million, while imports equaled £3.9 million. There were significant regional differences. As of 1770, for instance, Georgia, Maryland, Virginia, and the Carolinas maintained a roughly even trade balance with Britain on the strength of staple crop exports. At the same time, the Mid-Atlantic and New England colonies ran significant deficits. They serviced them with earnings from shipping and other mercantile services, in which New York and Philadelphia excelled, and exports of primary and semi-processed products.

The new American nation maintained imports of British manufactured goods. American producers benefited from the Napoleonic Wars (1803–1815); in 1807, they were exporting three times more goods than they had exported in 1793. From 1807 to 1830, British protectionism and a growing U.S. economy produced growing trade deficits, as manufacturing imports soared, while Britain kept its markets closed to U.S. finished goods. However, British demand for cotton soared during the mid-nineteenth century, and exports of the staple crop constituted half of America's total exports in the two decades prior to the Civil War (1861–1865). From 1791 to 1850, America's merchandise trade balance was in a deficit for all but eight years. At the same time, the volume of U.S. exports increased more than sevenfold, from $19 million in 1791 to $152 million in 1850. When services are included, the trade balance was in surplus for nineteen of the sixty years between 1791 and 1850.

From 1850 through the end of World War I (1914–1918), America's trade balance moved from slightly unfavorable to enormously favorable, reflecting the nation's emergence as a world economic power and the continuation of trade protectionism. Thus, from 1850 to 1873, the merchandise trade deficit totaled $400 million, as exports grew from $152 million to $524 million. From 1874 to 1895, the trade balance turned favorable on the strength of agricultural exports and increases in shipments of manufactured goods. Volume increased steadily as well, with exports of goods and services reaching $1 billion for the first time in 1891. From 1896 to 1914, the trade balance was markedly favorable, as U.S. manufacturers competed globally for markets. Indeed, the merchandise trade balance was some $9 billion in surplus for this period. Purchases of services reduced the overall trade surplus to $6.8 billion. Spurred by the European demand for U.S. goods and services during World War I, the U.S. trade surplus soared from 1915 to 1919. Net goods and services totaled $14.3 billion for the five-year period, with exports topping $10.7 billion in 1919—an amount that was not exceeded until World War II (1939–1945). Not incidentally, America also became a creditor on its current account for the first time, on the strength of lending to wartime allies Britain and France.

From World War II to the Twenty-First Century

During the interwar period, the U.S. trade balance was consistently in surplus on greatly reduced volumes of trade, even as the merchandise trade balance turned negative from 1934 to 1940. As was the case during World War I, U.S. exports soared during World War II, peaking at $21.4 billion in 1944. Much of this volume was owed to the lend-lease program. As a result, America enjoyed an enormously favorable balance of trade, which it sustained during the early postwar period, from 1945 to 1960.

The favorable trade position of the United States at the end of World War II, underpinned by the relative strength of its manufacturing sector, contributed to the willingness of U.S. administrations to liberalize the global trading regime through the General Agreement on Tariffs and Trade and its successor, the World Trade Organization. Both Democratic and Republican administrations remained committed to a freer trade policy stance—de-spite many exceptions, most notably steel, autos, and semiconductor chips—even as the U.S. merchandise trade balance disappeared in the late 1960s and then turned negative in the context of growing competitiveness on the part of European and Japanese manufacturers and sharply increased prices for crude oil.

From 1984 to 2000, the merchandise trade balance topped $100 billion in all but the recession years of 1991 and 1992, even as trade volumes increased absolutely and relative to GNP. In 1997, it exceeded $200 billion, as exports nearly reached $900 billion and GNP hit $8 trillion for the first time. For the twelve months ending 31 December 2001, the merchandise trade deficit stood at $425 billion. A surplus in services, which grew from $6.1 billion in 1980 to $85.3 billion in 1997, has offset 30 to 40 percent of the deficit on goods. America has funded its trade deficit largely by attracting foreign investment, so that it runs large surpluses on its capital account. As a result, the United States became the world's largest debtor on its current account during the 1980s and remained so at the beginning of the twenty-first century.

Bibliography

Balaam, David N., and Michael Veseth. Introduction to International Political Economy. Upper Saddle River, N.J.: Prentice Hall, 1996. See chapter 8.

Lovett, William A., Alfred E. Eckes Jr., and Richard L. Brink-man. U.S. Trade Policy: History, Theory, and the WTO. Armonk, N.Y.: M. E. Sharpe, 1999.

Thompson, Margaret C., ed. Trade: U.S. Policy Since 1945. Washington, D.C.: Congressional Quarterly, 1984.

U.S. Department of Commerce. Historical Statistics of the United States: Colonial Times to 1970. Washington, D.C.: General Printing Office, 1975.

Walton, Gary M., and Hugh Rockoff. History of the American Economy. 8th ed. New York: Harcourt, Brace, 1998.

—Michael R. Adamson

That part of the balance of payments relating to goods only (as opposed to services, monetary movements, official reserve transactions, etc.).

The balance of trade encompasses the activity of exports and imports, like the work of this cargo ship going through the Panama Canal.

The balance of trade (or net exports, sometimes symbolized as NX) is the difference between the monetary value of exports and imports in an economy over a certain period of time. A positive balance of trade is known as a trade surplus and consists of exporting more than is imported; a negative balance of trade is known as a trade deficit or, informally, a trade gap. The balance of trade is sometimes divided into a goods and a services balance; especially in the United Kingdom the terms visible and invisible balance are used.

Definition

The balance of trade forms part of the current account, which also includes other transactions such as income from the international investment position as well as international aid. If the current account is in surplus, the country's net international asset position increases correspondingly. Equally, a deficit decreases the net international asset position.

The trade balance is identical to the difference between a country's output and its domestic demand (the difference between what goods a country produces and how many goods it buys from abroad; this does not include money re-spent on foreign stocks, nor does it factor the concept of importing goods to produce for the domestic market).

Measuring the balance of payments can be problematic because of problems with recording and collecting data. As an illustration of this problem, when official data for all the world's countries are added up, exports exceed imports by a few percent; it appears the world is running a positive balance of trade with itself. This cannot be true, because all transactions involve an equal credit or debit in the account of each nation. The discrepancy is widely believed to be explained by transactions intended to launder money or evade taxes, smuggling and other visibility problems. However, especially for developed countries, accuracy is likely to be good.

Factors that can affect the balance of trade figures include:

• Prices of goods manufactured at home (influenced by the responsiveness of supply)
• Exchange rates
• Trade agreements or barriers
• Other tax, tariff and trade measures
• Business cycle at home or abroad.

The balance of trade is likely to differ across the business cycle. In export led growth (such as oil and early industrial goods), the balance of trade will improve during an economic expansion. However, with domestic demand led growth (as in the United States and Australia) the trade balance will worsen at the same stage in the business cycle.

Economic impact

Modern economists are split on the economic impact of the trade deficit with some viewing it as a loss in a fixed volume of trade and more radical Neoliberal voices who claim it is a sign of economic strength.

The traditional view opposes long run trade deficits and outsourcing for the sake of labor arbitrage to obtain cheap labor as an example of absolute advantage which does not produce mutual gain, and not an example of comparative advantage which does.^[1][2][3]

Neoliberal economists claim that trade deficits are beneficial, noting the correlation between increasing trade deficits and increasing GDP and employment ([1]). An expanding economy means increased demand for domestic and foreign products. This rising demand promotes domestic investment as both foreign and domestic businesses seek to capitalize on the growth in demand. As the rate of growth accelerates foreign credit sources have greater incentives to invest in a growing nation's capital. The greater net inflows from abroad, the greater the trade deficit. Thus, GDP growth can be correlated with a trade deficit.

Strong GDP growth economies such as the United Kingdom, Australia, Hong Kong and the United States run consistent trade deficits.

GDP growth may be due to excess borrowing to fund consumption and not an expansion of the base of an economy.^[4] Developed nations such as Canada, Japan, and Germany typically run trade surpluses. China also has a trade surplus. A higher savings rate generally corresponds with a trade surplus. In 2006, the United States has its lowest savings rate since 1933.^[5] Correspondingly, the United States has high trade deficits. The general decline of Great Britain is another example of the deleterious effects of long term trade deficits.

Some contend long term effects of the trade deficits are deleterious. Since the stagflation of the 1970s, the U.S. economy has been characterized by somewhat slower growth. In 1985, the U.S. began its growing trade deficit with China. In 2006, the primary economic concerns have centered around: high national debt ($9 trillion), high corporate debt ($9 trillion), high mortgage debt ($9 trillion), high unfunded Medicare liability ($30 trillion), high unfunded Social Security liability ($12 trillion), high external debt (amount owed to foreign lenders) and a serious deterioration in the United States net international investment position (NIIP) (-24% of GDP),^[6] high trade deficits, and a rise in illegal immigration. These issues have raised concerns among economists and unfunded liabilites were mentioned as a serious problem facing the United States in the President's 2006 State of the Union address.^[7]

Large imbalances may sometimes be a sign of underlying economic problems or rigidities. An example would be a situation where exchange rates have been fixed or pegged for political reasons at levels impeding a correction of a trade imbalance.

The trade deficit must be "financed" by foreign income or transfers, or by a capital account surplus. This includes inward foreign investment and capital purchases (stocks, bonds ect). An increase in net foreign liabilities tends to lead to an increase in the net outflow of income on international investments.

Those in favor of the trade deficit point to this financing as the source of the benefit. Instead of buying goods back, buyers in the receiving country send the money back in the form of capital. A firm in America sends dollars for Chinese toys, and the Chinese receivers use the money to buy stock in an American firm. Although this is a form of financing, it is not a debt on any party in America.

Such payments to foreigners have intergenerational effects: by shifting consumption over time, some generations may gain at the expense of others ([2]). However, a trade deficit may lead to higher consumption in the future if, for example, it is used to finance profitable domestic investment, which generates returns in excess of that paid on the net foreign liabilities (a situation that might arise if a country experiences an unexpected gain in productivity). Similarly, a surplus on the current account implies an increase in the net international investment position and the shifting of consumption to future rather than current generations.

However, trade imbalances are not always indicative of the smooth operation of the market given differences in international productivity and intertemporal consumption preferences. Trade deficits have often been associated with a loss of international competitiveness, or unsustainable 'booms' in domestic demand. Similarly, trade surpluses have been associated with policies that inefficiently bias a country's economic activity towards external demand, resulting in lower living standards. An example of an economy which has had a positive balance of payments was Japan in the 1990s. The positive balance was partly the result of protectionist measures that brought excessive profits to Japanese exporters.

United States trade deficit

The United States has posted a trade deficit since the 1970s, and it has been rapidly increasing since 1997 (see chart below). The US trade deficit hit a record high of 763.6 billion dollars in 2006, up from 716.7 billion dollars in 2005.[3]

It is worth noting on the graph that the deficit slackened during recessions and grew during periods of expansion. Also of note, many economists calculate trade deficits and/or current account deficits as a percentage of GDP. The U.S. last had a trade surplus in 1991, a recession year. ^[8]

Milton Friedman on trade deficits

US exports in 2006

Milton Friedman, the Nobel Prize-winning economist and father of Monetarism, argued that many of the fears of trade deficits are unfair criticisms in an attempt to push macroeconomic policies favorable to exporting[4] industries. He stated that these deficits are not harmful to the country as the currency always comes back to the country of origin in some form or another (country A sells to country B, country B sells to country C who buys from country A, but the trade deficit only includes A and B). In fact, in his view, the "worst case scenario" of the currency never returning to the country of origin was actually the best possible outcome: the country actually purchased its goods by exchanging them for pieces of cheaply-made paper. As Friedman put it, this would be the same result as if the exporting country burned the dollars it earned, never returning it to market circulation.

Critics claim that Friedman's argument is equivalent to saying that it doesn't matter if you get indebted, because eventually you will have to pay the money back. The obvious counterargument is that once a significant debt has been accumulated, paying it back may be painful. Friedman's supporters retort that when the money returns, the demand for foreign currency will make the exchange rate better for trade deficit country.

Friedman's view is seen by many as ignoring the intergenerational or long run consequences of deficits, low savings, and borrowing to fund consumption. If country A has a trade deficit because of large imports of consumer goods, other countries accumulate cash from country A. That money can be used to purchase existing investment assets and government bonds within country A. As a result, the return from those assets will accrue not to citizens of country A but to foreigners. The consumption standard of future generations in country A may therefore potentially decline as a result of the deficit. In particular, Americans are increasingly paying taxes to finance the interest on federal bonds held by foreigners. However, a criticism of this argument notes that all transactions are win-win. In the case of foreign investment in American assets, it helps fuel American economic growth and keeps US interest rates low. This argument is more appealing in the case of foreign direct investment, and less obvious when foreigners simply purchase the existing stock of assets.

Friedman also believed that deficits would be corrected by free markets as floating currency rates rise or fall with time to encourage or discourage imports in favor of the exports, reversing again in favor of imports as the currency gains strength. A potential difficulty however is that currency markets in the real world are far from completely free, with government and central banks being major players, and this is unlikely to change within the foreseeable future. Nevertheless, recent developments have shown that the global economy in undergoing a fundamental shift. For many years the U.S. has borrowed and bought while in general, the rest of the world has lent and sold. However, as Friedman predicted, this paradigm appears to be changing.

As of October 2007, the U.S. dollar has grown weaker against the euro, British pound, and many other currencies. For instance, the euro hit $1.42 in October 2007[5], the strongest it has been since its birth in 1999. Against this backdrop, American exporters are finding quite favorable overseas markets for their products and U.S. consumers are responding to their general housing slowdown by slowing their spendthrift habits. Furthermore, China, the Middle East, central Europe and Africa are absorbing more of the world's imports which in the end may result in a world economy that is more evenly balanced. All of this could well add up to a major readjustment of the U.S. trade deficit, which as a percentage of GDP, began in 1991.^[9]

Friedman and other economists have also pointed out that a large trade deficit (importation of goods) signals that the country's currency is strong and desirable. To Friedman, a trade deficit simply meant that consumers had opportunity to purchase and enjoy more goods at lower prices; conversely, a trade surplus implied that a country was exporting goods its own citizens did not get to consume or enjoy, while paying high prices for the goods they actually received.

Perhaps most significantly, Friedman contended strongly that the current structure of the balance of payments is misleading. In an interview with Charlie Rose, he stated that "on the books" the US is a net borrower of funds, using those funds to pay for goods and services. He pointed to the income receipts and payments showing that the US pays almost the same amount as it receives: thus, U.S. citizens are paying lower prices than foreigners for capital assets to exchange roughly the same amount of income. The reasons why the U.S. (and UK) appear to earn a higher rate of return on their foreign assets than they pay on their foreign liabilities are not clearly understood. An important contributing factor is that the U.S. has investment primarily in stocks abroad, while foreigners have invested heavily in debt instruments, such as U.S. government bonds ([6]). ^[10] Other reports contend that U.S. net foreign income has deteriorated, and appears set to stay in deficit in the future ([7]).

Friedman presented his analysis of the balance of trade in Free to Choose, widely considered his most significant popular work.

Physical balance of trade

Monetary balance of trade is different from physical balance of trade (which is expressed in amount of raw materials). Developed countries usually import a lot of primary raw materials from developing countries at low prices. Often, these materials are then converted into finished products, and a significant amount of value is added. Although for instance the EU (as well as many other developed countries) has a balanced monetary balance of trade, its physical trade balance (especially with developing countries) is negative, meaning that in terms of materials a lot more is imported than exported. This is part of an economic theory called dependency theory.

See also

• List of the largest trading partners of the United States

Notes

1. ^ Roberts, Paul Craig (2005-05-12). America is losing. Counter Punch. Retrieved on 2007-06-06.
2. ^ Roberts, Paul Craig (August 7, 2003). Jobless in the USA Newsmax. Retrieved on May 6, 2007.
3. ^ Hira, Ron and Anil Hira with forward by Lou Dobbs, (May 2005). Outsourcing America: What's Behind Our National Crisis and How We Can Reclaim American Jobs. (AMACOM) American Management Association. Citing Paul Craig Roberts, Paul Samuelson, and Lou Dobbs, pp. 36-38.
4. ^ Bivens, L. Josh (December 14, 2004). Debt and the dollar Economic Policy Institute. Retrieved on July 8, 2007.
5. ^ Associated Press (January 30, 2006).US savings rate hits lowest level since 1933MSNBC. Retrieved on May 6, 2007.
6. ^ Bivens, L. Josh (December 14, 2004). Debt and the dollar Economic Policy Institute. Retrieved on July 8, 2007.
7. ^ Cauchon, Dennis and John Waggoner (October 3, 2004).The Looming Nationl Benefit Crisis USA Today
8. ^ http://online.wsj.com/article/SB119024783913033237.html?mod=todays_us_page_one
9. ^ http://online.wsj.com/article/SB119024783913033237.html?mod=todays_us_page_one
10. ^ http://blogs.wsj.com/economics/2007/07/03/risk-loving-americans-counter-uss-foreign-debt/

External links

• Lower domestic saving leads to higher trade deficit from Aplia Econ Blog
• Are Trade Deficits a Drag on U.S. Economic Growth?
• Where Do U.S. Dollars Go When the United States Runs a Trade Deficit? from Dollars & Sense magazine
• America's Maligned and Misunderstood Trade Deficit
• Congressional Research Service (CRS) Reports regarding the U.S. trade deficit
• "Bad News" on the Trade Deficit Often Means Good News on the Economy
• US Federal Reserve Economic Data (FRED®). Current Account data can be found in category titled "U.S. Trade & International Transactions" or click here

International trade
Definitions	Balance of payments · Current account (Balance of trade) · Capital account · Foreign exchange reserves · Sovereign wealth funds · Net Capital Outflow · Comparative advantage · Absolute advantage · Import substitution · International trade
Organizations and policies	World Trade Organization · International Monetary Fund · World Bank Group · International Trade Centre · Trade bloc · Free trade zone · Trade barrier · Import quota · Tariff
Schools of thought	Free trade · Balanced trade · Mercantilism · Protectionism
Related issues	Globalization · Outsourcing · Trade justice · Fair trade

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