Economic Myths: The UK economy is "reliant on trade"

From the City AM editorial:

ONE should never read too much into any one set of numbers, but yesterday's batch of global economic indicators was grim. America, China and Germany are all slowing sharply, suggesting that world growth is dipping again. For economies such as Britain's, which are reliant on trade, this isn't good news...

Good grief.

a) All economies are reliant on "trade", it's the only way of measuring it and "economy" and "trade" are more or less the same thing anyway. The bulk of wealth is created by specialisation, the flip side of which is that there has to be more exchange (or "trade") between specialists. Work you do for yourself is difficult to measure or value, as is barter (even though all "trade" is ultimately barter, "money" is just a unit very handy unit of measurement).

b) Whole countries don't export to or import from each other. Some people make stuff and other people consume it. If you buy oranges in the UK, then they are "imported", if you buy oranges in Israel, they are "domestic"*. And if an Israeli tourist in London buys an orange then the Israeli farmer counts it as export and the UK wholesaler counts it as import, but spending by Israeli tourists in the UK counts as an export from the UK's point of view and as an import from Israel's point of view. It's still just orange growers selling oranges to people who like eating them.

c) As a matter of common sense and observation, the larger an economy is (more people or higher GDP), the smaller is the share of imports and exports as a fraction of GDP. For example, if all the countries in the world were merged into a single country, the sum total of exports or imports would be precisely $nil. And if Scotland becomes independent, all the sales to and purchases from "rest of UK" which hitherto counted as domestic will now show up as imports or exports, even though nothing has really changed. So assuming that he means "imports and exports" when he says "trade", then "trade" is inversely proportional to GDP or population size.

d) The UK is a relatively large economy and using regression analysis, we would expect imports and exports to be about 40% of our GDP. As it happens, the UK is also an island which is not at a convenient spot on the international trade routes and our imports and exports are "only" 32% of GDP.

So misleading crap as per usual.

* I've no idea whether the Israelis still grow and export oranges. They did when I was a lad.