L5) Recent Patterns & Trends

Question 1

Economy has changed at what scales…?

Answer 1

Macro-Scale: emergence of a global triad
Nation Scale: shifts in manufacturing production, int’l merch trade, shifting center of gravity
Micro Scale: importance of world cities

Question 2

What is the Global Triad? Which countries are involved?

Answer 2

Global Triad: three large producing trade regions
* 85% of world GDP & 85% of world trade total

Europe, Asia, & NA (aka Three legs)

Question 3

What are the largest four manufacturing nations?

Answer 3

China, USA, Japan, Germany

make up 50% of world manufacturing

Question 4

How has Asia’s manufacturing economy changed in the past 50 years?

Answer 4

In 1970, Europe had 40% of world manufacturing value added shares, Asia had lower than 15%

By GR, Europe decreases by over 5% while Asia has climbed 15%

Question 5

1978 China’s Economic Reform - Deng Xiaping

Answer 5

slows the gap between USA/China manufacturing rates (China is climbing)

Procedure:
* Opening up to foreign capital
* Privatization of state-owned enterprises: MNCs invest directly in this time to take advantage of low labour costs

Led to increased manufacturing value (value added)

Question 6

Changes in global geographical patterns of manufacturing after 20thC:

Answer 6

For most of 20thC, USA, Japan, & Germany dominated (post-war)

But, 2 substantial shifts through time:
1) Growing importance of NIEs => BRICs
2) Growth of manufacturing in E & SE Asia outpaces other regions

Question 7

What does BRICs stand for?

Answer 7

Brazil, Russia, India, China

Newly industrializing economies in manufacturing sector

Question 8

Trade Balances (2 types)

Answer 8

Trade Surplus: $$ exports > $$ imports

Trade Deficit: $$ exports < $$ imports => high imbalances hard to sustain

Question 9

History of trade balances in USA: why is trade important to consider for the success of an economy?

Answer 9

Historically, US exporting at proportional rates but began relying on imports (trade deficit) (Export-Oriented Production activity)
* Turn to borrowing to sustain high import activity, susceptible to financial crisis