Monday, October 30, 2006


Made in USA

A comment on an old post on the From Uruguay blog got me thinking.

Anonymous said...

Another good thing about an FTA with the states for Uruguay is that hardly any products are made in the US any more. We buy everything from other places, mostly China...

As an economist, I know this statement isn't true. Imports are only about 14% of US national income. In the US, most spending is on US-produced goods and services. European countries, by comparison, spend substantially more on imports: France 24%, Germany 29%, Spain 27%. It’s true that imports have increased in recent decades, but the US is still a domestically-focused economy.

Living in Uruguay, when I read the comment, made me realize how few US-made products are available here. While I can buy lots of US brands, they are manufactured in other countries: Oreo cookies from Argentina or Coca-Cola bottled in Uruguay. Kellogg’s cereal, Lay’s potato chips, Ford cars, Budweiser beer, and M&M candies are all available in Montevideo, but they aren’t imported from the US. They are produced by foreign subsidiaries of the US companies.

I started looking, in Uruguay, for products made in the US. I ran into many other familiar brands: Canon, Nestlé’s, Hellman’s, VW, SONY— but these aren’t even US brands, just well-known global brands. There’s a Nike shop selling sneakers at the mall, but Nike outsources all of its manufacturing, so I didn’t even look for a “Made in USA” label there. The old cars on the streets— a 1968 Dodge Polara, Pre-WWII Chevy trucks, Ford Model A’s— may have been produced in the US, but that’s economic history. I wanted to find something produced in 2006.

This sign at the shopping mall woke me up. I’d been making the same mistake the anonymous commenter made— thinking inside the box. Huge amounts of what we consume aren’t physical things and they don’t come in boxes. Everyday, I see US shows on Uruguayan TV. The theaters in Montevideo show the latest Hollywood releases. There are US banks throughout the city. Of course this is true in the US as well. Walk into a Walmart and you could get the impression that the US doesn't make anything. But we spend more on housing, education, and entertainment than we do at Walmart. Former Fed chairman, Alan Greenpan spoke famously about the "dematerialization" of the US economy. While, I wouldn't want to push this too far, it is important to remember that not everything of value fits in a shopping bag.

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