CHAPTER 7

Imports and Balance of Payments

Introduction

The United States is appropriately concerned about the highly negative BOP for imported oil. That trade deficit is now running a little over $300 billion each year. What is not often appreciated is that the U.S. negative BOP for manufactured goods has generally vastly exceeded the deficit for oil. As shown in Table 7.1, in the year 2000, the BOP for manufactured goods was negative $316 billion while that for oil was negative $104 billion—the deficit for manufactured goods exceeded that of oil by $212 billion. With the increasing price of oil, the gap has closed somewhat but in 2012, the deficit for manufactured goods was negative $457 billion compared to negative $315 billion for oil. Importing ...

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