What would be the impact of an increase in imports on an economy?
Answer:
It depends why imports are increasing.
Imports could increase because a country's income has risen or because its goods have become less competitive.
If a country becomes richer, then everyone in that country will have more to spend on everything, including imported goods. This is not a bad thing.
If a country's goods have become less competitive, it is also not a bad thing, since it must have some other good where it has a comparative advantage. By not producing as much of whatever it is importing (say bananas), it is able to specialise in producing more of the good in which it has its comparative advantage (apples). (eg if a country imports more bananas, then it doesn't need as many banana growers, but these people can start growing apples. While these people might be temporarily unemployed, they will be able to get better incomes from growing apples over the longer term if their country has a comparative advantage in growing apples).
Therefore, if imports go up, it just means that a country is trading more. Most of the time, this is a good thing, although there can be some short-term costs in terms of people needing to retrain etc.
loss of jobs in the industry from which those imports came.
Example, lots of cheap imported clothes from China, means less work for English clothes manufactures.
Basic I know, but that's about it.
A trade deficit if there are not enough offsetting exports.
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