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Real Statistics

Jul 31, 2011 • Businesses, Developing Economies, International Trade and Finance, Macroeconomic Measurement, Thinking Economically • 205 Views    No Comments

How high is Mount Everest?

No one really knows. China says 29,017 feet, Nepal, 29,028, and the National Geographic Society, 29,035. We don’t even agree about sea level. The U.S. uses the St. Lawrence River in Quebec. But the U.K uses another baseline. And other countries use a local reference point. Furthermore, the Himalayas are rising by several millimeters each year. As one scientist said, “The idea of saying, ‘The height of Everest is this, is an anachronism.’”

The Economic Lesson

Similar to Mount Everest’s height, a “Country of Origin” statistic no longer is accurate. A Toyota Camry is primarily American while a Ford pick-up is not. The Made in China iPhone has components from 9 countries. Learjet is based in Wichita, Kansas and owned by a Canadian company, Bombardier. For the origin of the Learjet 85:

  1. wings: Belfast
  2. horizontal and vertical stabilizers: Mexico
  3. engines: Canada
  4. fuselage: Mexico
  5. electrical system: Mexico

An Economic Question: How might balance of trade statistics be affected by more accurate data?

 

 

 

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