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How much does the European Union (and US) benefit from cheap overseas imports?
#1
I am interested in how the economies of the European Union and the United States benefit from cheap overseas imports, such as those from southeast Asia? How would their economies and standards of living be different without cheap overseas imports? Any articles or references are much appreciated.
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#2
Its a very debatable question, as imports benifit consumers. With low prices they spend more, which increases consumption, which increases output. There is a downside to this though, when imports are bought more, it hurts the countries companies, as they cannot sell their product. If you know anything about world price levels, you know how this works. To add to this though, when companies generate less profit, they are not so able to invest in the economy, which decreases investment and eventually leads to a decrease in output. It is ambiguous to say whether or not output will decrease or increase without knowing numbers and figures, and depending upon how many different kinds of products are being imported, the question becomes more and more complex. If you think about it in general though, companies have more money than citizens, in terms of the US and many of the EU, so output is likely going to be less than having people invest in their own countries businesses.
The only problem is that if they bought from companies of their own countries, they would pay more, and thus they would be able to afford less, and output would fall more than the other idea.
This is why capitalism works well, as long as there is perfect competition, like there is supposed to be in capitilism, but people get greedy, and thats why the US is in a huge recession.
Southeast asia is just picked due to the fact that they did not ever keep up in the industrial revolutions, and work like this is the best they can do without having a degree, and this is why they are slowly catching up to the first world.
The EU does well itself because they eliminate the export and import problems when trading between themselves, because countries only have certain things that they can produce, and by doing this, it allows the eastern block countries of old to catch/keep up with the powers like germany and france. standards of living are also hard to measure, because it is a proven fact that once a certain level of income is acheived, happiness is gained in very small increments, so people could be happier in some places making less than people in other places making more. it depends a lot upon what their government does for them. I live in canada, and people here make a little less than those in the states, but we are considered happier because health care is paid for. The only downside is that those who do not use healthcare are getting 'screwed' as some would put it.
I'm sorry i dont have any articles or references to back this all up, but I'm in my second year of economics at the U of Calgary, which is considered the best in canada, and i minor in european history.
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