global economic issues gregory w. stutes. global village do we live in a global village? – do...
TRANSCRIPT
Global Economic
Issues
Gregory W. Stutes
Global Village
• Do we live in a global village?– Do events around the world affect us as quickly as
if they happened in our own village?
• Events can be experienced simultaneously throughout the world.
• How does this affect economic globalization?
Overview of the Recent History• 1950s—Not Global
Our Starting Point to Examine the WorldPer Capita GDP
The Economy’s Income, Expenditure, and Production
• Gross Domestic Product (GDP)– Measures the total income of everyone in the
economy– Measures the total expenditure on the economy’s
output of goods and services– Measures production in the economy
• For an economy as a whole– Income must equal expenditure must equal
production
5
Measurement of Gross Domestic Product
• Gross domestic product (GDP)– Market value of all final goods and services produced within a country
in a given period of time• “GDP is the market value…”
– Market prices - reflect the value of the goods• “… goods and services…”
– Tangible goods & intangible services• “… produced…”
– Goods and services currently produced• “… within a country…”
– Goods and services produced domestically, regardless of the nationality of the producer
• “… in a given period of time”– A year or a quarter
6
Real Versus Nominal GDP• Total spending rises from one year to the next– Economy - producing a larger output of goods and
services– And/or goods and services are being sold at higher prices
• Nominal GDP– Production of goods and services– Valued at current prices
• Real GDP– Production of goods and services– Valued at constant prices– Designate one year as base year– Not affected by changes in prices
7
World Economy and Population in 1950
Country or Region
Population(Millions)
Share of World
Population
1950 GDP(in billions of 2005 $)
Share of World GDP
1950 Per Capita GDP (in 2005 $)
United States
152 6% $2,016 27% $13,263
Western Europe
305 12% $1,934 26% $6,341
Former USSR
171 7% $707 10% $4,135
Latin America
166 8% $576 8% $3,470
Japan 84 3% $223 3% $2,655
China 547 22% $332 4% $607
India 359 14% $308 4% $858
Africa 227 9% $281 4% $1,238
World 2,524 100% $7,382 100% $2,925
How are we measuring the size of these economies in US$
International Comparison Project
For Example: China
Can we do this?
Were we always this disconnected?
Export/GDP Ratio in 1950
• USA—• Europe—• France—• China, India, Japan, Taiwan—• Korea—• Latin America—
Roots of Modern Globalization
• New Global Institutions
• National Commitments to Globalization
• Changes in Technologies
New Global Institutions
• General Agreement on Tariffs and Trade (GATT)
• International Monetary Fund (IMF)
New Global Institutions
• International Bank for Reconstruction and Development (IBRD)
National Commitments to Globalization
National Commitments to Globalization
Changes in Technology
What was it like at the start of the 21st Century?
Population
• 1950
• 2006
Country or Region
Population (Millions)
Share of Population (Millions)
GDP (Trillions of
$)
Share of World GDP
Per Capita GDP
World 6,446 100% $58.6 100% $9,000
Country or Region
Population (Millions)
Share of Population (Millions)
1950 GDP (in billions of 2005 $)
Share of World GDP
1950 Per Capita GDP (1n 2005 $)
World 2,524 100% $7,382 100% $2,925
Population
• 1950
• 2006Country or
RegionPopulation (Millions)
Share of Population (Millions)
GDP (Trillions of
$)
Share of World GDP
Per Capita GDP
USA 296 5% $12.8 22% $42,600
Country or Region
Population (Millions)
Share of Population (Millions)
1950 GDP (in billions of 2005 $)
Share of World GDP
1950 Per Capita GDP (1n 2005 $)
USA 152 6% $2,016 27% $13,263
Population
• 1950
• 2006Country or
RegionPopulation (Millions)
Share of Population (Millions)
GDP (Trillions of
$)
Share of World GDP
Per Capita GDP
China 1305 20% $5.9 10% $4,500
Country or Region
Population (Millions)
Share of Population (Millions)
1950 GDP (in billions of 2005 $)
Share of World GDP
1950 Per Capita GDP (1n 2005 $)
China 547 22% $332 4% $607
Population
•
• 1950
• 2006Country or
RegionPopulation (Millions)
Share of Population (Millions)
GDP (Trillions of
$)
Share of World GDP
Per Capita GDP
India 1095 17% $2.7 5% $2,400
Country or Region
Population (Millions)
Share of Population (Millions)
1950 GDP (in billions of 2005 $)
Share of World GDP
1950 Per Capita GDP (1n 2005 $)
India 359 14% $308 4% $858
Population
• 1950
• 2006Country or
RegionPopulation (Millions)
Share of Population (Millions)
GDP (Trillions of
$)
Share of World GDP
Per Capita GDP
Africa 753 12% $1.4 2% $1,700
Country or Region
Population (Millions)
Share of Population (Millions)
1950 GDP (in billions of 2005 $)
Share of World GDP
1950 Per Capita GDP (1n 2005 $)
Africa 227 9% $281 4% $1,238
Economy
Who were the gainers/losers
Economy
• 1950
• 2006Country or
RegionPopulation (Millions)
Share of Population (Millions)
GDP (Trillions of
$)
Share of World GDP
Per Capita GDP
USA 296 5% $12.8 22% $42,600
Country or Region
Population (Millions)
Population (Millions)
1950 GDP (in billions of 2005 $)
Share of World GDP
1950 Per Capita GDP (1n 2005 $)
USA 152 6% $2,016 27% $13,263
Economy
• 1950
• 2006Country or
RegionPopulation (Millions)
Share of Population (Millions)
GDP (Trillions of
$)
Share of World GDP
Per Capita GDP
Japan 128 2% $4.0 7% $31,000
Country or Region
Population (Millions)
Population (Millions)
1950 GDP (in billions of 2005 $)
Share of World GDP
1950 Per Capita GDP (1n 2005 $)
Japan 84 3% $223 3% $2,655
Economy
• 1950
• 2006Country or
RegionPopulation (Millions)
Share of Population (Millions)
GDP (Trillions of
$)
Share of World GDP
Per Capita GDP
China 1305 20% $5.9 10% $4,500
Country or Region
Population (Millions)
Population (Millions)
1950 GDP (in billions of 2005 $)
Share of World GDP
1950 Per Capita GDP (1n 2005 $)
China 547 22% $332 4% $607
Economy
• 1950
• 2006Country or
RegionPopulation (Millions)
Share of Population (Millions)
GDP (Trillions of
$)
Share of World GDP
Per Capita GDP
India 1095 17% $2.7 5% $2,400
Country or Region
Population (Millions)
Share of Population (Millions)
1950 GDP (in billions of 2005 $)
Share of World GDP
1950 Per Capita GDP (1n 2005 $)
India 359 14% $308 4% $858
Economy & Population
• 1950
• 2006Country or
RegionPopulation (Millions)
Share of Population (Millions)
GDP (Trillions of
$)
Share of World GDP
Per Capita GDP
Latin America
549 9% $4.8 8% $8,700
Country or Region
Population (Millions)
Share of Population (Millions)
1950 GDP (in billions of 2005 $)
Share of World GDP
1950 Per Capita GDP (1n 2005 $)
Latin America
166 8% $576 8% $3,470
Economy
• 1950
• 2006Country or
RegionPopulation (Millions)
Share of Population (Millions)
GDP (Trillions of
$)
Share of World GDP
Per Capita GDP
Africa 753 12% $1.4 2% $1,700
Country or Region
Population (Millions)
Share of Population (Millions)
1950 GDP (in billions of 2005 $)
Share of World GDP
1950 Per Capita GDP (1n 2005 $)
Africa 227 9% $281 4% $1,238
Population & Economy
• Taiwan
• 1956
• 2011Country or
RegionPopulation (Millions)
Share of Population (Millions)
GDP (Trillions of
$)
Share of World GDP
Per Capita GDP
Taiwan 23 .36 .885 1% $38,491
Country or Region
Population (Millions)
Share of Population (Millions)
1950 GDP (in billions of 2005 $)
Share of World GDP
1956 Per Capita GDP (1n 2005 $)
Taiwan 9.4 .37
GDP/Capita 2x to 1/3 above
• 1950
• 2006Country or
RegionPopulation (Millions)
Share of Population (Millions)
GDP (Trillions of
$)
Share of World GDP
Per Capita GDP
USA 296 5% $12.8 22% $42,600
European Mont. Union
314 5% 9.6 16% $30,200
Country or Region
Population (Millions)
Share of Population (Millions)
1950 GDP (in billions of 2005 $)
Share of World GDP
1950 Per Capita GDP (1n 2005 $)
USA 152 6% $2,016 27% $13,263
Western Europe
305 12% $1,934 26% $6,341
GDP/Capita 4X to 1/3 above
• 1950
• 2006Country
or Region
Population (Millions)
Share of Population (Millions)
GDP (Trillions of
$)
Share of World GDP
Per Capita GDP
USA 296 5% $12.8 22% $42,600
Japan 128 2% $4.0 7% $31,000
Country or Region
Population (Millions)
Share of Population (Millions)
1950 GDP (in billions of 2005 $)
Share of World GDP
1950 Per Capita GDP (1n 2005 $)
USA 152 6% $2,016 27% $13,263
Japan 84 3% $223 3% $2,655
GDP/Capita 20X to 9X
• 1950
• 2006Country
or Region
Population (Millions)
Share of Population (Millions)
GDP (Trillions of
$)
Share of World GDP
Per Capita GDP
USA 296 5% $12.8 22% $42,600
China 1305 20% $5.9 10% $4,500
Country or Region
Population (Millions)
Population (Millions)
1950 GDP (in billions of 2005 $)
Share of World GDP
1950 Per Capita GDP (1n 2005 $)
USA 152 6% $2,016 27% $13,263
China 547 22% $332 4% $607
GDP/Capita 14X to 14X
• 1950
• 2006Country
or Region
Population (Millions)
Share of Population (Millions)
GDP (Trillions of
$)
Share of World GDP
Per Capita GDP
USA 296 5% $12.8 22% $42,600
India 1095 17% $2.7 5% $2,400
Country or Region
Population (Millions)
Share of Population (Millions)
1950 GDP (in billions of 2005 $)
Share of World GDP
1950 Per Capita GDP (1n 2005 $)
USA 152 6% $2,016 27% $13,263
India 359 14% $308 4% $858
GDP/Capita 10X to 25X
• 1950
• 2006Country
or Region
Population (Millions)
Share of Population (Millions)
GDP (Trillions of
$)
Share of World GDP
Per Capita GDP
USA 296 5% $12.8 22% $42,600
Africa 753 12% $1,4 2% $1,700
Country or Region
Population (Millions)
Share of Population (Millions)
1950 GDP (in billions of 2005 $)
Share of World GDP
1950 Per Capita GDP (1n 2005 $)
USA 152 6% $2,016 27% $13,263
Africa 227 9% $281 4% $1,238
Asia’s Rise—Africa’s Fall• 1950
• 2006Country
or Region
Population (Millions)
Share of Population (Millions)
GDP (Trillions of
$)
Share of World GDP
Per Capita GDP
Africa 753 12% $1.4 2% $1,700
China 1305 20% $5.9 10% $4,500
India 1095 17% $2.7 5% $2,400
Country or Region
Population (Millions)
Share of Population (Millions)
1950 GDP (in billions of 2005 $)
Share of World GDP
1950 Per Capita GDP (1n 2005 $)
Africa 227 9% $281 4% $1,238
China 547 22% $332 4% $607
India 359 14% $308 4% $858
Trade in Goods and Services
Will we continue?
China
• China has had a HUGE transformation– They have been growing at 8 – 10%– At that rate you double every decade.
• Imagine a 20 year old worker in 1980– Doubles in the 80s– Doubles in the 90s– Doubles in the 00s– That is a factor of 8 and the worker is in her 50s!!!
Challenges
• Inequality• Poverty• Resources• Urbanization• Water• Oil
How will this affect the US• Global economic growth will be less dependent on
the US.• US will not be able to control the pace of change.• US will not be able to control world oil prices.• US does not control growth rates in foreign
countries.• US does not have overwhelming power in
commercial technology.• US does not control flows of international financial
capital.• US does not control the value of its currency