Global Economics

Net Exports as a Percentage of GDP Over Time

A Tweet claims trade makes up close to 30% of GDP today vs. 19.8% in 1990. Let's investigate the claim.

The Tweet makes the claim by adding up real exports and real imports and divides the total by real GDP. I created a chart in Fred.

(Real Exports + Real Imports) / Real GDP

I confirm the numbers but the idea seems silly. Why?

Exports add to GDP while imports subtract from GDP.

(Real Exports - Real Imports) / Real GDP

(Real Exports - Real Imports) / Real GDP Details

The chart shows NET exports as a percentage of GDP.

Mike "Mish" Shedlock

6 Responses

  • DrEE

    Mar 7, 2018

    What's the relation of exports to GDP?

  • DrEE

    Mar 7, 2018

    More clearly, how has the ratio of exports to GDP varied over time?

  • Latkes

    Mar 7, 2018

    It's not silly. This is a measure of globalization.

  • abend237-04

    Mar 7, 2018

    The ratio of our total foreign trade to our total domestic economic activity. Carried to a logical extreme, we'll all be sitting on our butts in another three generations exchanging IOUs for foreign goods and services, mostly Chinese and Indian..

  • lol

    Mar 8, 2018

    gdp growth (lol) driven by trifecta of a trillion plus in student loans,CC,auto's,multi trillions in gov't borrowing/printing

  • Realist

    Mar 8, 2018

    Latkes makes a good point. Over the last 200 years, the economy has transitioned from local, to state, to national, to global. A car manufactured in Detroit contains raw materials and parts from all over the world. The free market and capitalism, if left alone, will find the most cost effective methods of production (and supply chain). Countries that embrace free market capitalism and free trade will be the winners. I notice that the TPP agreement will be signed today by the 11 remaining countries (after the US pulled out). It will reduce trade restrictions and tariffs and promote free-er trade among those 11 countries. I doubt it was written on a napkin (Mish’s idea) but at least it is moving in the right direction.

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