Economy and Trade

Precious stones and gems are a top import of the United Kingdom.

What Is It?

Imports are goods and services produced in other countries but purchased and consumed by residents and businesses of the subject country.

Gross Domestic Product (GDP) is the total value of the goods and services that are produced within a country's borders by citizens and non-citizens in a fiscal year.

How Is It Calculated?

Imports is a calculation of the value of a) physical merchandise, including freight and insurance, and b) services, including royalties, license fees, communication, construction, financial, information, and government services, that originate in other countries but are purchased and consumed by individuals, businesses, and government entities of the subject country.

Gross Domestic Product (GDP) is calculated using one of three methods:

Production Method: The sum of all value added to each stage of production of all goods and services.
Income Method: The sum of all wages, profits, interest, and rents.
Expenditure Method: The sum of the purchase values of all goods and services.

There will be slight variances when comparing these three methods, but they produce fundamentally the same result.

Imports as a percentage of GDP is calculated by dividing imports by GDP (Imports ÷ GDP) and is expressed as a percentage (%).

What Does It Mean?

The value of imports to a country’s economy is hotly disputed by economists, politicians, businesses, and the public. The following statements, however, are generally accepted to be true:

Imported products introduce competition to the local market and generally result in lower costs to businesses and consumers.
Importing makes certain raw materials and finished products available to local markets that would otherwise be unavailable.
Imports have the potential to erode local markets and put inefficient local manufacturers out of business with a resulting loss of jobs.
Overreliance on imports can establish a dependence on supplier countries for basic commodities and goods ranging from food to defense materials.