Asia's Developing Future

Trade deficits are considered bad news for economies, and for an economy the size of the United States, a deficit of $745 billion in 2015, the largest seen in decades, would be cause for alarm. But the true picture is more complex. Looking beyond traditional statistics shows how burgeoning global value chains are now driving changes in the manufacturing of, trade in, and value of goods. Multinational corporations that have successfully leveraged global value chains have pivoted away from manufacturing and now concentrate more fully on marketing, design, and innovation. Apple, Nike, Reebok, the Limited, and the Gap are major players in consumer electronics, athletic footwear, and fashion-oriented apparel, but own not a single production facility in the United States. With the exception of Apple, none of them owns production facilities anywhere in the world. Official statistics have yet to catch up with new trade realities emerging from global value chains. Although the gross profit margins of the Apple