According to a new annual study from the American Electronics Association (AeA), exports of high-tech goods were up 4 percent in 2005 over the previous year. The U.S. shipped $199 billion worth of high-tech equipment outside the country last year, up from $191 billion in 2004.
Despite that increase, a technology-goods trade deficit remains. In fact, it hit a record $96 billion. There’s no reason to be alarmed, however. The deficit is nothing more than an accounting measurement. Let William T. Archey, president and CEO of AeA, a trade association that represents the technology industry, explain:
“Many of the technology imports into the United States, particularly from China, Taiwan, and Mexico, are intra-company transfers from U.S. production facilities overseas that ship parts and finished products back to their domestic facilities.”
In other words, when a U.S. companymakes something overseas and ships it to this country to sell, it’s considered an import. And there’s a lot of that going on.
On the flip side, the largest market for American technology exports is the European Union, which imported $42.6 billion in goods, up 4 percent from the year before. Second is Canada at nearly $30 billion, a 7 percent increase over 2005, and followed by Mexico at $27.1 billion.
Did you catch that? Mexico spent about two-thirds of what the EU spent buying U.S. high-tech products.
AeA reports that the fastest-growing consumers of American high-tech equipment are Venezuela (33 percent), Brazil (20 percent), Colombia (19 percent), Thailand (17 percent), and India (15 percent). Tech exports to China increased by 14 percent.
Of course, we’re also buying high-tech goods. China is America’s biggest provider: $86.3 billion worth last year, a 26 percent more than in 2004.
What do these numbers tell us? A lot
Most economists believe that free trade is critical to economic health, especially since it promotes economic efficiency.
Moreover, free trade allows us to see which economies are growing and in what sectors, which can tell you where you want to place your bets on the future.
In reporting, the old maxim is: if you want to get to the bottom of things, follow the money. In economies it should be, follow the high-tech equipment.