introduction land area and population income income per capita international trade

Introduction

Land area and population

Income

Income per capita

International trade

The balance of payments

Dynamics and globalization

Trade connections in the world economy

Conclusions

CHAPTER 1; THE WORLD ECONOMYInternational Trade & the World Economy; Charles van Marrewijk

Explanations for trade

Classical 2. Opportunity costs 3. Comparative advantage

Neo-classical 4. Production structure 5. Factor prices 6. Production volume 7. Factor abundance

1. The world economy

New trade 9. Imperfect competition 10. Intra-industry trade

Policy

8. Trade policy

11. Strategic trade policy

12. Int. trade organizations 13. Economic integration

17. Applied trade policy modeling

Economicgeography

New interactions 14. Geographical economics 15. Multinationals 16. New goods, growth, and development

Industrialorganization

Internationalbusiness

Growth theory

Par

t I

Part

II

Part

III

Part

IV

18. Concluding remarks

Introduction


Income

Income per capita

International trade




Conclusions


Introduction International Trade & the World Economy; Charles van Marrewijk

International economics distinguishes between:

• International monetary analysis

• International real analysis

International Trade & the World Economy focuses on real analysis.

Chapter 1 The World Economy discusses some key economic concepts, focusing on ‘important’ countries.

Introduction


Income

Income per capita

International trade




Conclusions


Land area and population International Trade & the World Economy; Charles van Marrewijk

Table 1.1 Top 15 land area (1000 km2), 1999

country size % of world sum %

1 Russia 16,889 13.0 13

2 China 9,327 7.2 20

3 Canada 9,221 7.1 27

4 USA 9,159 7.0 34

5 Brazil 8,457 6.5 41

6 Australia 7,682 5.9 47

7 India 2,973 2.3 49

8 Argentina 2,737 2.1 51

9 Kazakhstan 2,671 2.1 53

10 Algeria 2,382 1.8 55

Land area and population International Trade & the World Economy; Charles van Marrewijk

Table 1.2 Top 15 population (millions), 1999


1 China 1,254 21.0 21

2 India 998 16.7 38

3 USA 278 4.7 42

4 Indonesia 207 3.5 46

5 Brazil 168 2.8 49

6 Russia 146 2.4 51

7 Pakistan 135 2.3 53

8 Bangladesh 128 2.1 55

9 Japan 127 2.1 58

10 Nigeria 124 2.1 60

Introduction


Income

Income per capita

International trade




Conclusions


Income International Trade & the World Economy; Charles van Marrewijk

To measure the value of all goods and services we distinguish:

• GDP = Gross Domestic Product (located in a country)

• GNP = Gross National Product (residents of a country)

GDP + net receipts of factor income = GNP

To correct for the large differences in prices between countries (especially for non-traded goods and services) the United Nations International Comparison Project calculates:

• Purchasing Power Parity exchange rates


0

500

1000

1500

2000

2500

0 500 1000 1500 2000 2500

GDP

GN

P

Germany

UK, France

Italy

China

GNP and GDP


Table 1.3 Top 15 gross national product (current $bn.), 1999


1 USA 9,163 29.8 30

2 Japan 4,395 14.3 44

3 Germany 2,091 6.8 51

4 UK 1,450 4.7 56

5 France 1,440 4.7 60

6 Italy 1,162 3.8 64

7 China 971 3.2 67

8 Brazil 730 2.4 70

9 Canada 615 2.0 72

10 Spain 589 1.9 74


550

704

728

776

780

1022

1148

1268

1322

1349

1930

2226

3186

4452

8878

0 3000 6000 9000

Indonesia

Spain

South Korea

Canada

Mexico

Russia

Brazil

Italy

UK

France

Germany

India

Japan

China

USA

PPP $ current $

GNP in

• current $

and

• PPP $

Introduction


Income

Income per capita

International trade




Conclusions


Income per capita International Trade & the World Economy; Charles van Marrewijk

Income per capita, ppp

9,900 to 41,300 (42)4,500 to 9,900 (37)2,100 to 4,500 (37)

400 to 2,100 (44)

Introduction


Income

Income per capita

International trade




Conclusions


International trade International Trade & the World Economy; Charles van Marrewijk

Table 1.5 Top 15 international trade ($bn.), 1999

country exports % of world country imports % of world

1 USA 956 13.7 USA 1,116 15.9

2 Germany 626 8.9 Germany 593 8.5

3 Japan 465 6.6 UK 396 5.7

4 France 382 5.5 Japan 380 5.4

5 UK 374 5.3 France 338 4.8

6 Italy 292 4.2 Italy 275 3.9

7 Canada 278 4.0 Canada 259 3.7

8 Netherlands 249 3.6 Netherlands 220 3.1

9 China 219 3.1 Hong Kong 203 2.9

10 Hong Kong 212 3.0 China 190 2.7


0

200

400

600

800

1000

1200

0 200 400 600 800 1000 1200

export value

impo

rt v

alue

Netherlands

Japan

Germany

USAExports

relative to

imports


170

133122 115 113

107 102 9988 88

0

50

100

150S

inga

pore

Hon

g K

ong

Mal

aysi

a

Bah

rain

Luxe

mbo

urg

Sw

azila

nd

Eq.

Gui

nea

Guy

ana

Mal

ta

Irel

and

The value of exports can exceed the level of GDP

Introduction


Income

Income per capita

International trade




Conclusions


The balance of payments International Trade & the World Economy; Charles van Marrewijk


Merchandise

Services

Investment income

Unilateral transfers

Current account

Capital account

Short-term capital

Long-term capital

Trade balance

Foreign direct investment

Portfolio investment

Private non-monetary

Private monetary institutions

Official reserves

Introduction


Income

Income per capita

International trade




Conclusions


Dynamics and globalization International Trade & the World Economy; Charles van Marrewijk

0 balanceaccountcapitalbalanceaccountcurrentoutflowcapitalnetaccountcurrentsurplus

-8

0

8

1970 1980 1990 2000

Australia Netherlands

Current account surplus (% of GDP)

indicator of accumulation of financial claims on the Rest Of the World (ROW).


0

100

200

300

400

500

1960 1970 1980 1990 2000

inde

x (1

960

= 1

00)

population

GDP

World GDP increases faster than world population


0

5

10

15

20

25

30

1960 1970 1980 1990 2000

wor

ld e

xpor

ts (

% G

DP

)

World exports increase faster than world GDP

Introduction


Income

Income per capita

International trade




Conclusions



International Trade & the World Economy; Charles van Marrewijk

Exports in direction closed arrow(Exports in direction open arrow)

South Asia

Latin America

Sub-Sahara Africa

Middle East &North Africa

AustralAsia

North America

East Asia& Pacific

WestEurope

East Europe & C. Asia

28

6

1

1

1

4

1 (2) 1 (2)

4 (5)

2 (3)

3 (3)3 (4)

1 (1)

1

1 (1)

1 (1)

3 (4)

3 (3)

(1)

Intra-regional exports

Introduction


Income

Income per capita

International trade




Conclusions


Conclusions International Trade & the World Economy; Charles van Marrewijk

‘Importance’ of countries varies with measure used:

• Land area Russia, China, Canada

• Population China, India, USA

• GDP/GNP, current $ USA, Japan, Germany

• GDP/GNP, PPP $ USA, China, Japan

• Import/export USA, Germany, Japan/UK

Surplus current account = net capital outflow

GDP increases faster than population

Exports increase faster than GDP

Trade flows have local character

Trade flows mainly between high income countries

introduction land area and population income income per capita international trade

Documents

world economyinternational

population international

gdpincome international

globalizationtrade connections

br area

gross national product

gross domestic product

population millions