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The Growth of Globalization

The Growth of Globalization. Since the end of WWII, world trade has grown much faster than world output Openness Index = (Exports + Imports)/GNP The index is a measure of trade Since 1945 (over 64 years) (Exports + Imports) > GWP GNP = gross national product GWP = gross world product.

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The Growth of Globalization

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  1. The Growth of Globalization • Since the end of WWII, world trade has grown much faster than world output • Openness Index = (Exports + Imports)/GNP • The index is a measure of trade • Since 1945 (over 64 years) • (Exports + Imports) > GWP • GNP = gross national product • GWP = gross world product

  2. Openness Index for select nations over time graph taken from James Gerber, 2008, International Economics, 4th Edition, Pearson Education

  3. The U.K., and the European Continent have traditionally been open nations • The Dutch international trade patterns have traditionally been leading others • Traditional Dutch flower auctions • Engines • Services • Processing & packaging produce • Amsterdam & other import/export centers

  4. France and Germany • French agriculture -- processing • But “common agricultural policy” import protection --- is a contention in World trade Organization negotiations • German engineering & manufacturing • Movement to common market • Western market relative to the Russian market – do East European nations go west or go to Russia?

  5. Japanese export expansion • Export expansion policies and exchange rate policy • Imports come into Japan primarily via state import houses -- import restrictions • Efficient manufacturing to reduce cost of exports to other nations

  6. China and other Asian nationexport expansion policies China -- exchange rate policy and export expansion policies --- manufacturing Taiwan – export expansion policies and manufacturing efficiency Singapore – the “city state” --- assembly and manufacturing center Malaysia – textiles, synthetics Hong Kong – trade center --- HK has their own currency separate of the PRC

  7. The U. S. • Not really an open trade state until the close of the gold window in 1973 • The big market --- so imports loom large • FDI – foreign direct investment by U.S. firms • U. S. agriculture now an exporting force • Inputs come in from all over the world to U.S. manufacturing • Isolationist and high tariff policies during the 1930’s – 1950’s

  8. Issues in the international economy • TRADE DEFICITS • REGIONAL TRADE AGREEMENTS • RESOLUTION OF TRADE CONFLICTS • GAINS FROM TRADE – DEVELOPED VS. DEVELOPING NATIONS • THE ROLE OF INTERNATIONAL INSTITUTIONS • EXCHANGE RATES & THE MACROECONOMY • FINANCIAL CRISES • CRISES & REFORM IN LATIN AMERICA • DEBT & CAPITAL FLOWS • EXPORT EXPANSION • CHINA & INDIA COME TO TOWN • WHAT OF THE EASTERN EUROPEAN NATIONS? • WHAT ABOUT RUSSIA • WHAT’S TO BECOME OF THE ENVIRONMENT & THE RULE ON NATURAL RESOUCES?

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