Lec 5: Recent Patterns and trends - A Global Perspective

Question 1

What do we notice about the world economy at a macro scale?

Answer 1

The emergence of a global triad: 3 regions that are the engines of the world economy (Asia, N-A, and Europe)

Together they make up 85% of world trade AND mfq.

Question 2

Which region has been the world’s largest economy since the 19th Century? Which one will soon overtake it?

Answer 2

The US. Expected to be overtaken by China in 2030

Question 3

What do we notice about world manufacturing activity at the national scale?

Answer 3

50% of world MANUFACTURING activity takes place in 4 countries (China, US, Japan, Germany)

Question 4

Between 1970 and 2008, what changes do we notice in the structure of world production?

What does this mean?

Answer 4

The share of world value added held by N-A and Europe is declining over time, where is the share held by Asia is increasing over time.

This represents a global shift, in which an increasing share of merchandise trade and production is held by developing countries rather than developed ones.

Question 5

What is value added?

Answer 5

the net value of products once you substract the cost of their production

outputs - inputs = x$

Question 6

What caused the rapid growth in Chinese mfq activities?

Answer 6

Xiaoping came to power in 1978
- China opens to international trade
- privatization of state enterprises

Question 7

Which 3 regions are responsible for 85% of manufacturing production?

Answer 7

Europe
Asia
N-A

Question 8

Which 3 countries dominated mfq production for much of the 20th century?

Answer 8

Japan, US, and Germany

Question 9

What happened in Japan in the 1990s?

Answer 9

Economic growth stalls. referred to as the lost decade

Question 10

What geographic shifts do we notice in global patterns of MANUFACTURING in the late 20th century?

Answer 10

• growing importance of newly industrializing economies
• a very fast growth of manufacturing in East and Southeast Asia

Question 11

Which region outpaced all other NIEs in growth of manufacturing?

Answer 11

East and Southeast Asia

Question 12

What are the BRICs?

Answer 12

Brazil, Russia, India, and China

Question 13

4 countries represent 50% of world mfq. What share of world trade flows do they same 4 countries account for?

What does this mean?

Answer 13

only 30%!

That trade flows are much more diverse than mfq.

Question 14

What are trade surplus and deficit

Answer 14

surplus: the value of exports exceeds the value of imports (give more than they take)

deficit: the value of imports exceeds the value of exports (take more than they give)

Question 15

Which 4 countries have the largest trade deficit?

Answer 15

US, UK, France, and Spain

Question 16

What do countries in a trade inbalance have to do?

Answer 16

borrow from abroad to sustain import activity

Question 17

What do we notice when comparing world trade and output growth?

Answer 17

Exports (trade) grows much faster than output (GDP)

Question 18

What do we notice about national economies’ need for trade?

Answer 18

Over time, trade has been increasingly important for national economies (it represents a higher % of GDP)

Question 19

Which country experienced the most rapid growth in trade to GDP ratio? Why is this?

Answer 19

China.

China has become the world’s mega-trader. In 2012, it represented about 10% of merchandise exports as a share of world exports.

Question 20

What geographical patterns do we notice in merchandise TRADE?

Answer 20

Three primary trading regions that trade within or between each other: NA, Europe, East and Southeast Asia

Question 21

What trends do we notice in patterns of merchandise trade over time?

Answer 21

• growing interconnectedness
• trade growth rates exceed output growth rates
• NIEs experience largest trade growth
• emergence of China as a world mega trader

Question 22

What is the shifting global balance?

Answer 22

An increasingly large % of world GDP is held by developing countries rather than developed ones.