In a previous post we looked at a list of America’s 20 worst per capita trade deficits in manufactured products. Today we look at the other end of the spectrum – our top 20 trade surpluses in manufactured products. In per capita terms, these are the people of the world (other than Americans themselves) who are America’s best customers for American made products. You may be surprised. Here’s the list:
The nations that you see high-lighted in yellow are net exporters of oil. More about that in a minute. First, though, it’s important to note that, unlike the list of our worst per capita trade deficits, which was dominated by densely populated countries (only 3 were less densely populated than the U.S.), this list is dominated by sparsely populated countries.
But there are some notable exceptions, beginning with the top 2 countries – Qatar and United Arab Emirates (UAE). In general, sparsely populated nations are rich in natural resources and maintain balances of trade by trading those resources for manufactured goods, including American products. But Qatar and UAE are rare exceptions. They are very tiny, densely populated nations who just happen to be literally afloat on a sea of oil. Thus, in spite of their dense populations, they still have large surpluses in those resources that they can trade for manufactured goods, just like the more sparsely populated larger nations, rich in resources, like Canada and Australia. Kuwait and Brunei are two more examples who appear on the list – tiny, densely-populated nations afloat on a sea of oil, just like Qatar and UAE.
That leaves four other nations on the list who are more densely populated than the U.S. – Belgium, Panama, The Netherlands and Lebanon. Panama is easy to explain. They are only slightly more populated than the U.S. and derive the lion’s share of their wealth, which they’re then able to trade for American manufactured goods, from an unusual source – operation of the Panama canal.
That leaves only Belgium, The Netherlands and Lebanon – very tiny nations and the three most densely populated nations on the list, by far – as the only remaining anomalies. The first two are among the wealthiest nations on earth. And even Lebanon ranks close to the top third of nations in terms of purchasing power. How do these nations defy the population density bugaboo that makes virtually every other densely populated nation on earth dependent on manufacturing for export?
First of all, it’s important to note that these three are very tiny nations who, combined, are smaller than the state of Indiana. Together they make up only 0.07% of the earth’s land mass while the remaining 17 nations on the list account for over 18%. Nations so small as these tend to have unusual economies that are heavily skewed toward services, especially financial services, and they then trade those services for manufactured goods. It’s the very reason that I rolled the data for tiny city states like Singapore, Liechtenstein, Luxembourg, San Marino and others into the data for the larger, surrounding countries.
Regarding Lebanon’s economy, the CIA World Fact Book has this to say:
The Lebanese economy is service-oriented; main growth sectors include banking and tourism.
Tourism? Really? While few Americans aside from those with family ties would choose to travel to Lebanon, it seems that their Mediterranean beaches are a big draw for people in that part of the world. And this is actually the reason that I excluded tiny island nations from my study of population density and per capita consumption. All have very unique economies dependent on tourism, and they trade tourist dollars for American-made products. It’s also the same reason that Belize appears on this top 20 list. While not an island, it too is a small country heavily dependent on tourism.
In the final analysis, aside from the anomalies of these three tiny, densely populated countries and a few tiny major oil exporters, low population densities dominate the list of nations with whom the U.S. has surpluses in manufactured goods. The combined population density of the 20 nations on this list is only 20 people per square mile. Compare that to the list of our top 20 trade deficits, where the combined population density was 343 people per square mile. The contrast is so stark it bears repeating: 20 people per square mile vs. 343 people per square mile (four times the population density of the U.S.).
If the president wanted to make real progress on restoring a balance of trade, he’d drop his goal of doubling exports and instead focus on boosting free trade with sparsely populated nations while implementing tariffs on imports from densely populated nations.
Now that we’ve looked at both ends of the trade spectrum, we’ll next consider the entire trade picture for 2010. Stay tuned.