<p>GDP is not itself a measure of welfare, though in some circumstances changes in GDP correlate fairly well with changes in measures of welfare (see for example Coyle D <em><a href="https://www.amazon.co.uk/GDP-Brief-but-Affectionate-History-x/dp/0691156794" rel="nofollow noreferrer">GDP: A Brief but Affectionate History</a></em> pp 113-122). So it's a fallacy to argue that if the increases in exports and imports do not change GDP they cannot be good or bad.</p>

<p>If, for example, the initial position was one of autarky, and if the exports are of a good in which the country has a comparative advantage and the imports are of a good in which it has a comparative disadvantage, then welfare can be raised (as indicated for example by higher consumption from the same domestic inputs).</p>

<p>As a secondary point, especially for a small country which must accept world prices for goods it exports or imports, trade will result in changes in at least some domestic prices. That in turn means that it may not even be true that GDP would not change, since some of the prices used in the value added calculations to measure GDP (from the output perspective) will have changed.</p>

CC BY-SA 3.0
2017-06-17T11:44:47.553Z
2017-06-17T11:44:47.553Z
Adam Bailey
<p>There are plenty of issues that can be relevant here, which mean it is hard to give a precise answer. On the one hand, even though GDP is not growing, at least the balance of trade is roughly unchanged. Some countries could experience an equivalent unaffected change in GDP via a trade deficit (e.g. if part of the fall in net imports is compensated with, say, an increase in consumption), which can fuel a <a href="https://www.ncbfaa.org/Scripts/4Disapi.dll/userfiles/uploads/Charles_Zhao_-_trade_deficit_paper_2015.doc.pdf" rel="nofollow noreferrer">currency depreciation and create inflationary pressures</a>, not only on imported goods but on locally produced good which use imported inputs.</p>

<p>On the other hand, it is interesting to compare two countries with the same GDP but different level of exports and imports. The country with greater trade levels is more likely engaged in global value chains, which spur specialisation, and <a href="https://www.ids.ac.uk/ids/global/pdfs/JHHSRegStudies25jun02.pdf" rel="nofollow noreferrer">learning</a> for local producers. The literature recognises the role of trade as a mechanism to spur <a href="http://blalock.dyson.cornell.edu/wp/imports_062305.pdf" rel="nofollow noreferrer">technology transfer</a> (and even transfer of <a href="https://insight.kellogg.northwestern.edu/article/the_global_idea_market" rel="nofollow noreferrer">ideas</a>), thereby fostering productivity and growth.</p>

CC BY-SA 3.0
2017-06-16T15:23:22.200Z
2017-06-16T15:53:26.490Z
2017-06-16T15:53:26.490Z
luchonacho
<p>A rise in import and export can mean anything. For example, places like Hong Kong and Singapore, have extremely high import/export rate. Both both places are merely transit hub for neighbourhood area.</p>

<p>Trade agreement may also increase both import and export dramatically. But there is a huge difference between an industrial country with the agricultural country; a highly advanced agricultural country versus a poor agricultural country.</p>

CC BY-SA 3.0
2017-06-16T14:50:03.460Z
2017-06-16T14:50:03.460Z
mootmoot
<p>I recently came across a question that asks, if exports in a country rises by USD10 billion and imports rises by USD10 billion, what's good about both of these?</p>

<p>To my understanding, the GDP wouldn't change as Net Exports would be constant, so I'm not quite sure how exactly is this good or bad.</p>

<macroeconomics><international-trade>
What's good about both exports and imports of a country rising at the same time?
The Artist
# What's good about both exports and imports of a country rising at the same time?

(Asked by: username_0 on 2017-06-16)

I recently came across a question that asks, if exports in a country rises by USD10 billion and imports rises by USD10 billion, what's good about both of these?

To my understanding, the GDP wouldn't change as Net Exports would be constant, so I'm not quite sure how exactly is this good or bad.

**Tags:** macroeconomics, international-trade


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## 3 answers

### Answer by username_1 on 2017-06-17. Score: 2

GDP is not itself a measure of welfare, though in some circumstances changes in GDP correlate fairly well with changes in measures of welfare (see for example Coyle D *[GDP: A Brief but Affectionate History](https://www.amazon.co.uk/GDP-Brief-but-Affectionate-History-x/dp/0691156794)* pp 113-122). So it's a fallacy to argue that if the increases in exports and imports do not change GDP they cannot be good or bad.

If, for example, the initial position was one of autarky, and if the exports are of a good in which the country has a comparative advantage and the imports are of a good in which it has a comparative disadvantage, then welfare can be raised (as indicated for example by higher consumption from the same domestic inputs).

As a secondary point, especially for a small country which must accept world prices for goods it exports or imports, trade will result in changes in at least some domestic prices. That in turn means that it may not even be true that GDP would not change, since some of the prices used in the value added calculations to measure GDP (from the output perspective) will have changed.


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### Answer by username_2 on 2017-06-16. Score: 2

There are plenty of issues that can be relevant here, which mean it is hard to give a precise answer. On the one hand, even though GDP is not growing, at least the balance of trade is roughly unchanged. Some countries could experience an equivalent unaffected change in GDP via a trade deficit (e.g. if part of the fall in net imports is compensated with, say, an increase in consumption), which can fuel a [currency depreciation and create inflationary pressures](https://www.ncbfaa.org/Scripts/4Disapi.dll/userfiles/uploads/Charles_Zhao_-_trade_deficit_paper_2015.doc.pdf), not only on imported goods but on locally produced good which use imported inputs.

On the other hand, it is interesting to compare two countries with the same GDP but different level of exports and imports. The country with greater trade levels is more likely engaged in global value chains, which spur specialisation, and [learning](https://www.ids.ac.uk/ids/global/pdfs/JHHSRegStudies25jun02.pdf) for local producers. The literature recognises the role of trade as a mechanism to spur [technology transfer](http://blalock.dyson.cornell.edu/wp/imports_062305.pdf) (and even transfer of [ideas](https://insight.kellogg.northwestern.edu/article/the_global_idea_market)), thereby fostering productivity and growth.


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### Answer by username_3 on 2017-06-16. Score: 1

A rise in import and export can mean anything. For example, places like Hong Kong and Singapore, have extremely high import/export rate. Both both places are merely transit hub for neighbourhood area.

Trade agreement may also increase both import and export dramatically. But there is a huge difference between an industrial country with the agricultural country; a highly advanced agricultural country versus a poor agricultural country.


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