"Made in the U.S.A. (Except for the Parts)"
by Louis Uchitelle

Source: The New York Times, April 8, 2005.
http://select.nytimes.com/search/restricted/article?res=FB0F12F63C5A0C7B8CDDAD0894DD404482

             Under a system of flexible exchange rates, when the value of the dollar falls relative to other currencies, imported goods become more expensive. Imports should decline. The article "Made in the U.S.A." points out that this simple dynamic is complicated by global production. Because manufactured goods produced in the United States often contain parts that were made overseas, an increase in demand for U.S. goods also increases a demand for imported intermediate goods. Exports and imports are rising simultaneously.

             Industrial integration is the term for this phenomenon. In fact, many U.S. companies have set up plants overseas to produce the intermediate products that go into the products assembled domestically. Just think how big the labels would have to be if all of the places where all the parts were produced were listed on a product, rather than just the location of final assembly!

• List the products with imported content mentioned in the article.
• What difficulties does industrial integration pose for the U.S. Current Accounts Deficit (described in Chapter 32)?