Regarding Global Economy

cutecontinent

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K, just making sure I have this right, since this is touched on in a current novel.

Let's say someone in China buys an iPhone. Their money, in effect, is going back to the USA. So this single purchase, in turn, raises America's GDP no matter how infinitesimal, right?

In other words, Apple / Microsoft help the American economy. Yep?

Just making sure I don't do this :p
 

cutecontinent

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Thanks. I've been studying up on this stuff and it's really murky. I've asked my friends who supposedly read up on economics and they're just like, "uhh, yeah, that sounds right".

I'll keep reading, just put this out there in the off-chance that someone knew for certain, as these forums tend to hold really knowledgeable types.
 

JayD

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Ignoring all other factors (like is the iPod made in China, designed in the US, marketed to the world, and sold in China?), a person buying an iPod in China benefits both Apple and the person who bought the iPod. People often forget the second part of this, where the buyer also benefits. But it makes sense when you think about it: you only ever buy something if it benefits you.

As for benefiting our "economy", that's a bit more vague. I mean how much of the income from that purchase gets infused into our economy? Or is it used to build bigger factories in other countries? Things are not always cut-and-dried.

Anyways, this is just what I remember from micro/macro economics in college.
 

Gregg

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A number of years ago I read a book titled "Common Sense Economics". It's very basic and easy to understand. I was so impressed, I gave a copy to my then teenage sons.
There's a new edition which I haven't seen. Here's the full title, available at Amazon (of course):

Common Sense Economics: What Everyone Should Know About Wealth and Prosperity

James D. Gwartneyhttp://www.amazon.com/Common-Sense-..._1_33?s=books&ie=UTF8&qid=1298835092&sr=1-33#
James D. Gwartney (Author)
Visit Amazon's James D. Gwartney Page
Find all the books, read about the author, and more.
See search results for this author
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(Author), Richard L. Stroup (Author), Dwight R. Lee (Author), Tawni Hunt Ferrarini (Author)
 

Bing Z

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Let's say someone in China buys an iPhone. Their money, in effect, is going back to the USA. So this single purchase, in turn, raises America's GDP no matter how infinitesimal, right?

In other words, Apple / Microsoft help the American economy. Yep?


I believe the answer is both yes and not really.

When someone in China buys an iPhone, money goes to all over the world: the local dealer, the local wireless service provider, the factories in China, India, Taiwan, or US that makes the hardware and components, various shippers (more Toyota/Isuzu trucks), oil & power companies, Apple who designs and provides software etc, some New Yorkers who handle marketing campaigns, tons of people involved. Applying what's seen in the US, I'd say the biggest winners are the local wireless service provider (which presumably has to buy more tech products from European/American/Japanese companies) and Apple.

This is big for Apple. They makes a lot of money out of this. Hopefully they will pay some US tax. All the Apple employees, contractors, marketing people, lawyers, and everyone involved in the process make good money. They buy bigger houses and watch more movies and hopefully pay more taxes. These are good for the US. The bad news for the US is that not really that many American workers have been involved and benefited from this particular process in this particular example.

Selling Intel chips to China should be another whole different story--that one may be pretty much 100% American productivity and profit.

I think the Intel and iPhone stories represent two different sides in today's global economy. The Intel high tech story is what developed countries maintain an edge and they make good monopolized money there. The iPhone example showcases a more common phenomenon, that Corporate America is better off nowadays by selling various products to developing countries that used to be too poor to buy anything. However, the reason these countries and their people can buy more stuff is that they have become more competitive in terms of productivity and therefore are making more money.
 

backslashbaby

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K, just making sure I have this right, since this is touched on in a current novel.

Let's say someone in China buys an iPhone. Their money, in effect, is going back to the USA. So this single purchase, in turn, raises America's GDP no matter how infinitesimal, right?

In other words, Apple / Microsoft help the American economy. Yep?

Just making sure I don't do this :p

Yes :)


The overall subject is very complicated, but your statement is true.
 

cutecontinent

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Thanks guys, you've all been repped, clears it up (hard to just Google for this and this is the only forum I've ever joined)