Investment and the Trade Balance
Our second example, the relationship between foreign investment and trade balances, is
equally troubling to businesspeople. Suppose that hundreds of multinational companies
decide that a country is an ideal manufacturing site and start pouring billions of
dollars a year into the country to build new plants. What happens to the country’s trade
balance? Business executives, almost without exception, believe that the country will
start to run trade surpluses. They are generally unconvinced by the economist’s answer
that such a country will necessarily run large trade deficits.
It’s easy to see where the business-people’s answer comes from. They think of their own
companies and ask what would happen if capacity in their industries suddenly expanded.
Clearly their companies would import less and export more. If the same story is played
out in many industries, surely this would mean a shift toward a trade surplus for the
economy as a whole.
The economist knows that just the opposite is true. Why? Because the balance of trade is
part of the balance of payments, and the overall balance of payments of any country—the
difference between its total sales to foreigners and its purchases from foreigners—must
always be zero.1 Of course, a country can run a trade deficit or surplus. That is, it can
buy more goods from foreigners than it sells or vice versa. But that imbalance must
always be matched by a corresponding imbalance in the capital account. A country that
runs a trade deficit must be selling foreigners more assets than it buys; a country that
runs a surplus must be a net investor abroad. When the United States buys Japanese
automobiles, it must be selling something in return; it might be Boeing jets, but it
could also be Rockefeller Center or, for that matter, Treasury bills. That is not just an
opinion that economists hold; it is an unavoidable accounting truism.
So what happens when a country attracts a lot of foreign investment? With the inflow of
capital, foreigners are acquiring more assets in that country than the country’s
residents are acquiring abroad. But that means, as a matter of sheer accounting, that the
country’s imports must, at the same time, exceed its exports. A country that attracts
large capital inflows will necessarily run a trade deficit.
). Pitäisi ehkä enemmän keskittyä pohtimaan mitkä palvelut ovat oikeasti tarpeen ja arvokkaita, kuin sitä, mistä voidaan leikata. Listaa vain asiat joita Kunnan pitäisi tuottaa ja loput, ne ovat sitten leikkurikamaa. Myös kova olisi tuo palveluseteli tms. järjestelmä, missä mulla on henkilökohtainen budjetti x euroa käytettävissä urheiluun tai kulttuuriin ja sitten voin itse valita minne menen. Tässä varmaan pelkona on, että nämä "meille" tärkeät palvelut kuten kaupunginmuseot ja paikallinen nukketeatteri eivät enää saa fyrkkaa.