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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (38276)	8/17/2005 4:21:33 PM
From: GraceZ	Read Replies (1) \| Respond to of 306849

how does the govt know the workers are in India, is there a survey or something? Money has to flow, clearly the subs in India aren't working for free, the bean counters follow the money. Their production is counted as an import when a US company has foreign subsidiaries in the GDP and counted as a US product in the GNP, that portion produced outside the US and it's territories. Obviously money made here has to flow back there to pay the capital improvements, expenses and salaries. One can surmise that internally each company keeps careful tabs unless they've found a way to pay them "under the table". For tax reasons, US companies want to declare the imported portion of a product, if they are taxed locally they can use that payment to offset US obligations. It's not an easy thing to keep track anymore who does what and to whom, since we sell mostly information which doesn't have to have a bill of lading as it travels from one country to another. When I upload files for my clients, they go to Norway before they go next door and it's just as easy for me to ship my product to China as it is to someone across town. The way you track an actual import or export is with money, who pays the bill and who gets the money. When I pay my digital delivery service the credit card company transfers funds to Norway, It is at this point that the BEA says I've imported a service. But when I send files to a designer in Canada who is working on a project for a US school (who is paying me via the US based photographer) which then gets dropped into a Quark document and sent back via the Net to get printed here there is no export/import at all until the designer in Canada invoices and gets paid by the US school, at that point the design service expense becomes an import. It's usually a tiny portion of the final product but then maybe the printer is using imported inks and paper....see it goes on and on <g>. Borders become far less meaningful with multi-nationals. You have a lot of multi-nationals like a company I've worked for off and on for 30 years, XRAY. The dental supply biz is a very local biz, so instead of building wholly owned Densply factories abroad they've simply acquired foreign companies that are already established and then applied their knowledge and operational skills in making them run efficiently within each individual market. Since they have expanded into a lot of third world and formerly communist countries who have trade restrictions on US companies (maybe they require a domestic partner or they've placed tariffs on imports) this method works in their favor to enter into markets that might be closed to them completely otherwise. Walking into one of their foreign subsidiaries you'd never know it was owned by a US company and they don't advertise the fact (unlike the millions Toyota is spending to advertise their US factories). The income generated in China doesn't necessarily ever come back here in a form that can be measured but it does show up on the consolidated income statements and balance sheets. One would guess some of it gets spent maintaining memberships at the York Country Club for their officers! If you are really interested in how all this is done in detail there is a book put out by the World Bank called "System of National Accounts" which is sort of the GAAP recommendation for how countries should account for various measures. Obviously there are variations from their recs in many countries including the US but it covers how they feel it should be done. The other source for strictly the US is the BEA whose publications have almost too much detail.