Download International Economics Lecture 2

Master in Human Development and Food Security
2014-2015
International Economics
Lecture 2
Dr. Silvia Nenci
University of Roma Tre
[email protected]
Silvia Nenci
Outline
I PART:
The Ricardian Model: a summing up
In class problems
The Heckscher-Ohlin Model
II PART:
New players: the Emerging Economies
Silvia Nenci
The Ricardian model
It focuses on technology differences across countries
as an explanation for trade.
It explains the concept of comparative advantage
and why it works as an explanation for trade
patterns.
Book: Feenstra/Taylor, 2011 , International Trade,Worth Publishers
Silvia Nenci
KEY POINTS of the Ricardian Model
1. the pattern of trade is determined by comparative
advantage.
• A country has comparative advantage in producing a good
•
when the country’s opportunity cost of producing the good
is lower than the opportunity cost of producing the good in
another country.
Even countries with poor technologies can export the goods
in which they have comparative advantage
2. There are gains from trade for both countries.
• By exporting the good in which a country has the lowest
opportunity cost, the country could benefit from
participating in international trade (i.e. more consumption)
Book: Feenstra/Taylor, 2011 , International Trade,Worth Publishers
Silvia Nenci
IN-CLASSPROBLEMS
1. What determines the pattern of international trade
between two countries in the Ricardian model?
Answer: The pattern of trade is determined by
comparative advantage. The country with a comparative
advantage in the production of a product
will export the good.
Silvia Nenci
IN-CLASSPROBLEMS
2. Why is the production possibilities frontier a
straight line in the Ricardian model?
Answer: The production possibilities frontier is a
straight line in the Ricardian model because of the
assumption that the marginal products of labor are
constant. In the Ricardian model there are no
diminishing returns.
Silvia Nenci
IN-CLASSPROBLEMS
3. What are the absolute advantages?
Taiwan has an absolute advantage in the production of
both telephones and radios.
What is the opportunity cost of 1 unit of telephones in
terms of radios in Taiwan? In Vietnam?
Silvia Nenci
IN-CLASSPROBLEMS
Answers:
4. Vietnam has a comparative advantage in the production of
telephones. True or false?
TRUE: Vietnam has a lower opportunity cost of producing
telephones relative to Taiwan.
Silvia Nenci
IN-CLASSPROBLEMS
5. If the two countries engage in international trade, what will
Taiwan produce?
Because Vietnam has the lower opportunity cost in the production
of telephones and hence comparative advantage in producing
this good, Taiwan has a comparative advantage in the production of
radios. Thus, Taiwan will specialize in the production of radios
Silvia Nenci
The Heckscher-Ohlin Model
Silvia Nenci
Why countries trade
An overview of trade theories:
Silvia Nenci
The Heckscher-Ohlin Model
The Heckscher-Ohlin model assumes that trade occurs because
countries have different resources.
The HO model is a long-run model because all factors of production
can move between the industries.
The model investigates also how the opening of trade between the
two countries affects the payments to labor and to capital in each of
them
Silvia Nenci
Heckscher-Ohlin Model
• The model was developed in 1919 by two Swedish
economists, Eli Heckscher and Bertil Ohlin
• To explain the “golden age” of international trade
between 1890 and 1914, during which there was an
increase in the ratio of trade to gross domestic product
(GDP)
• This increase of the amount of international trade
coincided with improvements in transportation
(steamship and railroad).
• They assumed the same technologies across countries
and uneven distribution of resources to explain trade
Book: Feenstra/Taylor, 2011 , International Trade,Worth Publishers
Silvia Nenci
Examples of international trade driven by
different resources
• Canada has a large amount of land and therefore exports
agricultural and forestry products as well as petroleum
• US, Western Europe and Japan have many highly skilled
workers and much capital and export sophisticated
services and manufactured goods
• China and other Asian countries have a large number of
workers and moderate but growing amounts of capital
and export less sophisticated manufactured goods
Book: Feenstra/Taylor, 2011 , International Trade,Worth Publishers
Silvia Nenci
Heckscher-Ohlin Model
Basic assumptions:
• 2 countries: Home and Foreign
• 2 goods: computers and shoes
• 2 factors of production: labor and capital
The total amount of capital (K) in an economy is given by the sum of the
capital used in shoes KS and computers KC.
The total available labor (L) in the economy is equal to the labor used in
shoes LS and computers LC.
The 6 assumptions of the Heckscher-Ohlin model are as follows:
Assumption 1: the two factors of production, labor and capital, can move
freely between the industries.
Assumption 2: Shoes production is labor-intensive; that is, it requires
more labor per unit of capital to produce shoes than computers, so that
LS /KS > LC /KC.
Book: Feenstra/Taylor, 2011 , International Trade,Worth Publishers
Silvia Nenci
Heckscher-Ohlin Model
Assumption 3: Foreign is labor-abundant, by which we mean that the labor–
capital ratio in Foreign exceeds that in Home, L*/K*> L/K.
Equivalently, Home is capital-abundant, so that K/L >K*/L* (i.e. resources
differ across countries).
• Why?
• Geographic size, populations, immigration/emigration, different stage of
development, etc.)
Assumption 4: The final outputs, shoes and computers, can be traded freely
(i.e., without any restrictions) between nations, but labor and capital do not
move between countries.
Assumption 5: The technologies used to produce the two goods are identical
across the countries (the opposite of that in the Ricardian model). A very
unrealistic assumption!
Assumption 6: Consumer tastes are the same across countries, and
preferences for computers and shoes do not vary with a country’s level of
income. A very unrealistic assumption!
Silvia Nenci
Book: Feenstra/Taylor, 2011 , International Trade,Worth Publishers
Heckscher-Ohlin Model
No-Trade Equilibrium
Production Possibilities Frontiers, Indifference Curves, and
No-Trade Equilibrium Price
FIGURE 4-2 (1 of 3)
No-Trade Equilibria in Home and Foreign
The Home production possibilities
frontier (PPF) is shown in panel (a),
and the Foreign PPF is shown in
panel (b).
Book: Feenstra/Taylor, 2011 , International Trade,Worth Publishers
Because Home is capital
abundant and computers are
capital intensive, the Home
PPF is skewed toward
computers.
Heckscher-Ohlin Model
No-Trade Equilibrium
Production Possibilities Frontiers, Indifference Curves, and
No-Trade Equilibrium Price
FIGURE 4-2 (2 of 3)
No-Trade Equilibria in Home and Foreign (continued)
Home preferences are summarized
by the indifference curve, U.
The Home no-trade (or autarky)
equilibrium is at point A.
Book: Feenstra/Taylor, 2011 , International Trade,Worth Publishers
The flat slope indicates a low
relative price of computers,
(PC /PS)A.
Heckscher-Ohlin Model
No-Trade Equilibrium
Production Possibilities Frontiers, Indifference Curves, and
No-Trade Equilibrium Price
FIGURE 4-2 (3 of 3)
A higher relative price of computers
No-Trade Equilibria in Home and Foreign Foreign preferences are summarized
by the indifference curve, U*
(continued)
Foreign is labor-abundant and shoes are The Foreign no-trade equilibrium is at
labor- intensive, so the Foreign PPF is point A*, with a higher relative price
of computers, as indicated by the
skewed toward shoes.
steeper slope of (P*C /P*S)A*.
Book: Feenstra/Taylor, 2011 , International Trade,Worth Publishers
Heckscher-Ohlin Model
Free-Trade Equilibrium
Home Equilibrium with Free Trade
FIGURE 4-3 (1 of 2)
International Free-Trade Equilibrium at Home
At the free-trade world relative price of
computers, (PC /PS)W,
Home produces at point B in panel (a) and
consumes at point C,
exporting computers and importing shoes.
Book: Feenstra/Taylor, 2011 , International Trade,Worth Publishers
Point A is the no-trade equilibrium.
The “trade triangle” has a base equal to
the Home exports of computers (the
difference between the amount produced
and the amount consumed with trade,
(QC2 − QC3).
Heckscher-Ohlin Model
Free-Trade Equilibrium
Home Equilibrium with Free Trade
FIGURE 4-3 (2 of 2) International Free-Trade Equilibrium at Home (continued)
The height of this triangle is the Home
imports of shoes (the difference between
the amount consumed of shoes and the
amount produced with trade, QS3 − QS2).
Book: Feenstra/Taylor, 2011 , International Trade,Worth Publishers
.
Heckscher-Ohlin Model
Free-Trade Equilibrium
Foreign Equilibrium with Free Trade
FIGURE 4-4 (1 of 2)
International Free-Trade Equilibrium in Foreign
At the free-trade world relative price of
computers, (PC /PS)W,
Foreign produces at point B* in panel (a) and
consumes at point C*,
importing computers and exporting shoes.
Book: Feenstra/Taylor, 2011 , International Trade,Worth Publishers
Point A* is the no-trade equilibrium.)
The “trade triangle” has a base equal to
Foreign imports of computers (the
difference between the consumption of
computers and the amount produced with
trade, (Q*C3 − Q*C2).
Heckscher-Ohlin Model
Free-Trade Equilibrium
Foreign Equilibrium with Free Trade
FIGURE 4-4 (2 of 2)
International Free-Trade Equilibrium in Foreign (continued)
The height of this triangle is Foreign
exports of shoes (the difference
between the production of shoes and
the amount consumed with trade, Q*S2
– Q*S3).
Book: Feenstra/Taylor, 2011 , International Trade,Worth Publishers
.
Heckscher-Ohlin Model
Free-Trade Equilibrium
Pattern of Trade
• Home exports computers, the good that uses
intensively the factor of production (capital) found in
abundance at Home.
• Foreign exports shoes, the good that uses intensively
the factor of production (labor) found in abundance
there.
• This important result is called the Heckscher-Ohlin
theorem.
Book: Feenstra/Taylor, 2011 , International Trade,Worth Publishers
K eKEY
y TPOINTS
e r m of the Heckscher-Ohlin model
1. In the Heckscher-Ohlin model countries trade because the
available resources (labor, capital, and land) differ across
countries.
2. In the Heckscher-Ohlin model, we assume that the technologies
are the same across countries
3. The Heckscher-Ohlin model is a long-run framework, so labor,
capital, and other resources can move freely between the
industries
4. Patterns of trade: With two goods, two factors, and two
countries, the Heckscher-Ohlin model predicts that a country will
export the good that uses its abundant factor intensively and
import the other good.
Silvia Nenci
The Emerging Economies
Silvia Nenci
International Trade and Economic Integration:
the case of Emerging countries
We look at:
1. Gains from trade & economic integration (with a focus on DCs):
what the theory sais, what the evidence finds
2. Economic characteristics of DCs and EEs
•
Facts and figures
3. Main channels of EEs global impact:
•
•
•
•
Growth and global production networks
Trade flows and trade patterns
Investment
Governance
4. Key questions and implications
Silvia Nenci
Gains from trade: the theory -1
What is meant by the “gains from trade”?
Two kinds of gains:
1. static gains
2. dynamic gains
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Gains from trade: the theory -2
Static gains: the gains from the reallocation of factors of
production in sectors where the country has a comparative
advantage. As producers and consumers allocate resources
most efficiently
+ consumption, + production
Dynamic gains: the gains that accrue over time from a higher
productivity of production factors and a higher total factor
productivity.
Firms or industry take advantage of economies of scale.
Pro-competitive effects (rationalization of production costs,
reduction in technical inefficiency).
More competition and opportunities for innovation (technological
spillovers, learning-by-doing, learning-by importing and learning by
exporting)
Silvia Nenci
Is trade good? Yes, but….
Not only gains…
Trade is predicted to benefit countries as a whole in
several ways, but trade may harm particular groups
within a country:
• It may have effects on the distribution of income within a
country
• It can adversely affect the owners of resources that are
used intensively in industries that compete with imports
Silvia Nenci
Trade, trade liberalization & DCs: the
empirical evidence
Gains to DCs from trade liberalization are often
exaggerated
According to standard economic models, removal of
all of the rich countries' barriers to the merchandise
exports of DCs would result in very little additional
income for the exporting countries
Silvia Nenci
KEY ISSUE: THE GLOBAL IMPACT OF MULTILATERAL TRADE POLICY ON DCs- MACRO EFFECTS: Income effects
WHAT WE KNOW
REFERENCES
QUANTIFICATION
ASSUMPTIONS
A remarkable number of empirical works
focused on the effects of various multilateral
round negotiations on DCs' income, where
DCs are taken as a group both at regional and
global level.
These works did not achieve a common stand
on the issue.
Most of the earlier studies (based on UR)
present overall positive effects on income
Recent studies (mainly focused on DDA
projetions) are more cautious about the
estimated DCs' gains from trade liberalization.
This is partially due to: an improving of the
econometric models that better specifies
country characteristics; more detailed trade
policies considered in the analysis; updated
data sets; less protectionism left to lose
OECD (1993), Goldin, Knudsen, and van der
On average, the earlier studies
Mensbrugghe (1993), Francois, McDonald and
Nordstrom (1994), World Bank/OECD (1993), Stoekel estimate an increase from 1% up to
(1990), Peterson (1992), DRI (1993), Nguyen, Peroni and 5% of world income (smaller for DCs)
Wigle (1993)
Yang (1994), Francois, McDonald, Nordström (1995),
Harrison, Rutherford, Tarr (1996), Goldin and van der
Mennsbrugghe (1996), Hertel, Martin, Yangashima, and
Dimaran (1996), Brown, Deardorff, Fox, and Stern
(1996), Laird and Safadi (1996); Whalley (2000); Hertel
and Martin (2000); Hoekman et al. (2003); Dimaranan,
Hertel and Keeney (2003); Francois, van Meijl and van
Tongeren (2003); Stiglitz and Charlton (2004); Hertel and
Winters (2005); Hertel and Keeney (2005); Ackerman,
(2005); Polaski S. (2006); IFPRI (2006)
Recent studies estimate an increase of
less than 1% of world income together
with extremely limited effects on
poverty alleviation. Contradictory
outcomes for DCs.
1. Focus on those elements more easily
quantifiable (tariff cuts, agriculture,
textiles) rather than on elements harder
to quantify (dispute settlement, TRIMs,
TRIPs).
2. They typically assume perfect
competition and constant returns to
scale.
3. They follow fairly conventional
literature
4. Basically static analysis (growth
impacts are evaluated by comparing
regional income before and after
liberalization);
Silvia Nenci
Trade, trade liberalization & DCs: the
empirical evidence -3
Global impact: No common stand.
Weak gains from trade liberalization, even lower in the most recent
studies
LATEST STUDIES
Hertel and Keeney (2005)
84 billions of dollars (of which 22 of DCs); 0.3% of
world GDP
CGE-GTAP 6 database. Liberalization measures: removing of import
market access; export subsidies; domestic support.
Anderson et al. 2005a
by $290 to $460 billion, with higher percentage
gains for developing countries (0.8 to 2.0 percent)
CGE-LINKAGE model (with dynamic features)
Polaski S. (2006)
a one-time increase in world income of $40 to $60 Applied general equilibrium (AGE) model of global trade (the
billion (increase of less than 0.2 percent of current Carnegie model); comparative static gains; a multicountry, multiglobal GDP) with plausible Doha scenarios
sector general equilibrium model; innovations: a) labor is
disaggregated into three types (agricultural labor, urban unskilled
labor, and urban skilled labor); b) existence of unemployment of urban
IFPRI(2006)
increase of 1,04% of GDP for HICountries; 0,6%
for Meaddle income countries; 1,6% for Low
income countries (strong trade liberalization
scenario)
unskilled labor in developing countries.
MIRAGE -CGE model (the CEPII model); multi-sector, multi-region
model with a sequential dynamic recursive set-up; perfect competition
is assumed in all sectors.
Silvia Nenci
DCs’Liberalization Costs
Loss of government revenue from reducing trade barriers
Adjusting cost because the opening of protected markets
(domestic reforms)
Implementation costs linked to WTO commitments
Shock risks because of international openness
Silvia Nenci
Global integration of DCs
In the last few decades developing countries have
experienced increasing involvement in the global
markets…..
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The shift of growth to Developing
countries
(per capita GDP growth rate, per cent)
5,0
4,5
4,0
3,5
3,0
2,5
2,0
1,5
1,0
0,5
0,0
1960s
Source: World Bank, WDI 2006
1970s
1980s
Industrialized economies
1990s
2000-2004
Developing economies
Silvia Nenci
The DCs’ importance on World Trade
Chart 2: Development of merchandise exports and imports volume, 1990-2008
(Indices, 1990=100)
500
Developing economies
400
300
200
Developed economies
100
1990
91
92
93
94
95
96
97
98
99
2000
01
02
03
04
Developing economies-exports
Developing economies-imports
Developed economies-exports
Developed economies-imports
05
06
07
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2008
Developing country exports
have shifted toward manufactures
Today, 80% of developing country merchandise
exports are manufactures. Much of that
manufacturing trade is linked to FDI and to
participation in global production networks
Percent
80
Manufactures
60
40
Minerals
20
Agriculture
0
1965
1970
Source: Dollar, 2006
1975
1980
1985
1990
1995
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Foreign direct investments - FDI(mld $): the
new role of DCs
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*FDI definition
A cross-border investment by a resident entity in one economy
with the objective of obtaining a lasting interest in an
enterprise resident in another economy.
• The lasting interest implies the existence of a long-term
relationship between the direct investor and the
enterprise and a significant degree of influence by the
direct investor on the management of the enterprise
• Ownership of at least 10% of the voting power,
representing the influence by the investor, is the basic
criterion used.
Different from a Portfolio investment: investment made by an
investor who is not particularly interested in involvement in
the management of a company. The purpose of the
investment is solely financial gain.
Silvia Nenci
DCs’ increasing participation in the global
governance
The World Trade Organization (WTO) example: WTO is the international
organization whose primary purpose is to open trade for the benefit of all.
It provides a forum for negotiating agreements aimed at reducing obstacles to
international trade and ensuring a level playing field for all
160 members - about 2/3 are DCs
Source: WTO, March 2013
Silvia Nenci
The EMERGING ECONOMIES (EEs)
Within the developing world the rise of the Emerging
Economies (EEs) – China, India, Brazil, and South Africa
CIBS or BRICS with Russia– as both economic and
political actors,
is attracting interest and having significant and farreaching impact…
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Interest by Media
Interest by Academia
Growing amount of studies devoted to the analysis of
the impact of the EEs on the global economy:
• Rodrik, 2006; Whalley, 2006; Bussolo et al., 2007; Winters
and Yusuf, 2007; Kaplinsky and Messner, 2008; Gu et al.,
2008; McDonald et al., 2008; Qureshi and Wan, 2008;
Nenci, 2008; Hsieh and Klenow, 2009; OECD, 2009; SantosPaulino and Wan, 2010, Amiti and Freund, 2010; Whalley
and Medianu, 2010; Harrigan and Deng, 2010; Feenstra and
Wei, 2010; Amann, 2011; Wang and Whalley, 2011; Wang
et al., 2011; Harris et al., 2011; Hanson, 2012; Montalbano
and Nenci, 2014.
Silvia Nenci
The BRICS economies
The BRIC (Brazil, Russia, India and China) acronym:
Goldman Sachs in 2001
-
BRICS* economies:
represent almost 3 billion people (about 40% of world
population)
account for more than a quarter of the world's land
have a nominal GDP of US$14.9 trillion (approximately 10%
of world GDP)
have an estimated US$4 trillion in combined foreign
reserves
Now BRIC is a symbol of the shift in global economic power
but also the title of the formal association
Silvia Nenci
New global players
Thanks to their economic growth and size EEs have
emerged as important powers.
They have acquired leadership roles thanks to their
ability to formulate policy, articulate the views held by
broad groups of DCs (in WTO, WB, IMF, G20, etc.).
Consequently, the world economy is undergoing a
process of rapid change
Silvia Nenci
Which impacts and channels?
Various channels are taken into consideration to
assess the impact of Emerging economies
dynamism.
Although EEs have very different economic
structures, their performance might affect the
world economy mainly through 4 channels:
-
global production;
trade flows;
investment flows;
global and regional governance.
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PRODUCTION: Weight of EEs and projections
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PRODUCTION: Share of single EEs on global
production
ICs 68%
DCs 32%
Source: IMF, World Economic Outlook, 2010
Growth under
the crisis
Source: IMF, WEO 2014
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TRADE: CIBS’ weight in world trade, 2011
CIBS as a group shares an impressive trend. They are currently
the leading exporters and importers – both
in merchandise and services – in their respective regions
Merchandise
Countries
Commercial services
Rank in world trade* Share in world Share in world Rank in world trade* Share in world Share in world
Exports Imports total exports total imports
Exports Imports total exports
total imports
China
Brazil
2
16
3
15
10.4
1.4
9.5
1.3
4
18
3
10
4.4
0.9
6.0
1.9
India
13
8
1.7
2.5
5
5
3.3
3.1
South Africa
28
22
0.5
0.6
27
27
0.3
0.5
European Union
1
1
14.9
16.2
1
1
24.7
21.1
USA
3
2
8.1
12.3
2
2
13.9
10.0
*Excluding intra-EU trade
Source: World Trade Organization, 2013
Silvia Nenci
INVESTMENT:
Global FDI inflows, top 20 host economies
(Billions of dollars)
The changing
pattern of FDI
inflows is
confirmed also
in the global
ranking of the
largest FDI
recipients:
in 2010, half of
the top 20 host
economies were
from developing
and transition
economies
Silvia Nenci
INVESTMENT: FDI outflows from DCs
Fonte: UNCTAD, on-line database (2004)
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GOVERNANCE: Regional Trade Agreements
(RTAs) involving CIBS
Country
Brazil
China
India
South Africa
Total
Notified RTAs in force Announced RTAs
5
10
2
14
5
4
1
33
8
Total RTAs
5
12
19
5
41
Source: WTO RTA database, August 2010
*Regional Trading Agreement (RTA), Regional Integration Agreement (RIA), or Preferential
Trading Agreements (PTA) ⇒ generic terms (often used interchangeably) to describe the
process of economic integration
Regional Economic Integration: agreements between groups of countries in a geographic
region to reduce, and ultimately remove, tariff and nontariff barriers to the free flow of
goods, services, and factors of production between each other.
Silvia Nenci
CO2 Emissions by Region
Notes: *World includes international aviation and international marine bunkers, which are shown together as Bunkers. **Calculated
using the IEA’s energy balances and the Revised 1996 IPCC Guidelines. CO2 emissions are from fuel combustion only. ***Asia
excludes China.
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Other impacts: SOCIAL CHANGES
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Other impacts: CONSUMPTION
Source. The Coca Cola Company
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Key questions and implications
Silvia Nenci
Some key questions and implications
1. TRADE:
•
Who are likely to be the losers and winners
(complementary or competitive effects for trade
partners)?
•
Are EEs a threat for Advanced Countries?
2. GROWTH:
•
Are EEs engine for growth?
3. GOVERNANCE:
•
Is a new global order developing?
Silvia Nenci
Who are likely to be the losers and winners?
EEs’ performance and trade expansion can affect differentially
other developing countries and developed countries too.
Their specialization can generate, in some cases, complementary
effects, in other cases competitive effects.
EEs can be seen as:
- competitors for those economies that have similar comparative
advantages in the same products and/or services.
- driving forces for those economies that have complementary
production and trade structures, because producers can benefit
from the demand for their output from CIBS and they can be
included in regional value chains.
Silvia Nenci
CIBS Trade Dinamism:
Trade Specialization 1996-98
Leamer (1984; 1995)
10 ind.l clusters:
• 2 raw materials (petroleum and raw
materials)
• 4 crops (forest, animal, trop.agr., cereals)
• 4 manufactures (lab-int., cap.int., machinery,
chemicals)
Source: Montalbano, Nenci 2010
Silvia Nenci
CIBS Trade Dynamism:
Trade Specialization 2006-08
CIBS Trade Specialization (RSCA average values 2006-2008)
PETRO
0,8
0,6
CHEM
MAT
0,4
The specialization of trade
has evolved
0,2
0
-0,2
-0,4
MACH
FOR
-0,6
CHINA 06-08 CHN
-0,8
INDIA 06-08 IND
-1
South Africa ZAF
BRAZIL 06-08 BRA
CAP
TROP
LAB
ANL
CER
Source: Montalbano, Nenci 2010
62
Silvia Nenci
CIBS’ main competitors
(for the top five exports of each country, 2006-2008)
Product
Top 3 Advanced Countries
Top 3 Developing Countries
China
1
2
3
4
5
Electrical, electronic equipment
Boilers, machinery; nuclear reactors, etc
Articles of apparel, accessories, knit or crochet
Articles of apparel, accessories, not knit or crochet
Iron and steel
USA
Germany
Italy
Italy
Germany
Japan
USA
Germany
Germany
Japan
Germany
Japan
France
France
Belgium
Korea
Korea
Turkey
Bangladesh
Russian Fed.
Mexico
Mexico
Bangladesh
India
Ukraine
Malaysia
Malaysia
India
Turkey
Korea
1
2
3
4
5
Mineral fuels, oils, distillation products, etc
Pearls, precious stones, metals, coins, etc
Organic chemicals
Iron and steel
Boilers, machinery; nuclear reactors, etc
Canada
USA
USA
Germany
Germany
Norway
UK
Germany
Japan
USA
USA
Israel
Belgium
Belgium
Japan
Russian Fed.
UAE
China
China
China
Saudi Arabia
South Africa
Korea
Russian Fed.
Korea
UAE
China
Saudi Arabia
Ukraine
Mexico
1 Mineral fuels, oils, distillation products, etc
2 Ores, slag and ash
3 Vehicles other than railway, tramway
4 Boilers, machinery; nuclear reactors, etc
5 Iron and steel
South Africa
1 Pearls, precious stones, metals, coins, etc
2 Iron and steel
3 Mineral fuels, oils, distillation products, etc
4 Vehicles other than railway, tramway
5 Boilers, machinery; nuclear reactors, etc
Canada
Australia
Germany
Germany
Germany
Norway
USA
Japan
USA
Japan
USA
Canada
USA
Japan
Belgium
Russian Fed.
Chile
Korea
China
China
Saudi Arabia
Peru
Mexico
Korea
Russian Fed.
UAE
South Africa
China
Mexico
Ukraine
USA
Germany
Canada
Germany
Germany
UK
Japan
Norway
Japan
USA
Israel
Belgium
USA
USA
Japan
UAE
China
Russian Fed.
Korea
China
India
Russian Fed.
Saudi Arabia
Mexico
Korea
China
Ukraine
UAE
China
Mexico
Both developed and developing countries seem to be affected by CIBC competition
India
Brazil
Source: Author's elaboration on UN-Comtrade data
Legend : Hong Kong and Taipei are not taken into consideration as competitors for China.
Silvia Nenci
Are EEs engine for growth?
1
Innovation in emerging economies is likely to take off as
income levels rise
Sources: Global Development Horizons 2011, based on IMF IFS, World Bank WDI and World
Intellectual Property Organization.
Are EEs engine for growth? -2
The specialization of trade has evolved
(mainly in China ).
China, India and Brazil have become increasingly engaged in
sophisticated and technology-intensive production and
trade, shifting from labour to capital-intensive
commodities, and enjoying rapid productivity gains across
all manufacturing activities
significantly
Is a new global order developing?
• EEs have acquired leadership roles at international
level (WTO, G20, WB, etc.)
• Multinationals from emerging markets will be
increasingly important sources and drivers of global
investment flows
• The international monetary system will move toward
a multi-currency regime
• A new global economic order is unfolding as the
balance of global growth shifts from developed to
emerging economies
Silvia Nenci
Summary -1
EEs have registered an extraordinary economic
performance that has affected global economy mainly
through these channels:
• Production
• Trade
• Investment
• Governance
They have acquired leading roles at the international
level in key institutions and contexts.
Silvia Nenci
Summary -2
In terms of growth/production: they (or some) can
be considered engines for growth thanks to the
gradual shift from labour to capital intensive sectors
in the production and trade
In terms of trade: they can be seen as competitors
or driving forces for other economies (it depends on
the specialization pattern)
Now many issues to be faced
Silvia Nenci
Conclusions
• The postwar global economic structure –defined by the
dominant position of advanced countries –is in the midst
of a fundamental change
• Rapid globalization and expected higher growth rates in
emerging market economies will translate into greater
economic influence for developing countries
• The move to multipolarity will be by and large positive
for developing countries, but the transition needs to be
managed!
Silvia Nenci
References List
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•
•
•
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Hanson, G. H., 2012, “The Rise of Middle Kingdoms: Emerging Economies in Global
Trade", Journal of Economic Perspectives, 26(2), 41-64.
Montalbano P. e Nenci S., 2014, “The Trade Competitiveness of Southern Emerging
Economies: A Multidimensional Approach Through Cluster Analysis”, in World Economy,
37: 783–810;
Montalbano, P. and S. Nenci, 2012, "The Trade Specialization of CIBS: A Threat to
Whom?", The International Trade Journal, 26, 5.
Nayyar, D. , 2009, “China, India, Brazil and South Africa in the World Economy: Engines of
Growth?”, in A. U. Santos-Paulino, and G., Wan (eds.) Southern Engines of Global Growth.
Oxford: Oxford University Press.
Nenci, S., 2008, “The Rise of the Southern Economies: Implications for the WTOMultilateral Trading System”, WIDER Research Paper No. 10.
Qureshi, M.S. and G. Wan, 2008, “Trade Expansion of China and India: Threat or
Opportunity?”, The World Economy, 31, 10, 1327-1350.
Wang, J., D. Medianu and J. Whalley, 2011, “The Contribution of China, India and Brazil
to Narrowing North-South Differences in Gdp/Capita, World Trade Shares, and Market
Capitalization”, NBER Working Paper 17681
[email protected]
Silvia Nenci