Download Recent History

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 World
Per 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
–
–
–
–
7
Production of goods and services
Valued at constant prices
Designate one year as base year
Not affected by changes in prices
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
Country or
Region
Population
(Millions)
Share of
Population
(Millions)
1950 GDP
(in billions
of 2005 $)
World
2,524
100%
$7,382
100%
$2,925
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
• 2006
Share of
1950 Per
World GDP Capita GDP
(1n 2005 $)
Population
• 1950
Country or
Region
Population
(Millions)
Share of
Population
(Millions)
1950 GDP
(in billions
of 2005 $)
Share of
1950 Per
World GDP Capita GDP
(1n 2005 $)
USA
152
6%
$2,016
27%
$13,263
Country 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
• 2006
Population
• 1950
Country or
Region
Population
(Millions)
Share of
Population
(Millions)
1950 GDP
(in billions
of 2005 $)
Share of
1950 Per
World GDP Capita GDP
(1n 2005 $)
China
547
22%
$332
4%
$607
Country or
Region
Population
(Millions)
Share of
Population
(Millions)
GDP
(Trillions of
$)
Share of
World GDP
Per Capita
GDP
China
1305
20%
$5.9
10%
$4,500
• 2006
Population
•
• 1950
Country or
Region
Population
(Millions)
Share of
Population
(Millions)
1950 GDP
(in billions
of 2005 $)
Share of
1950 Per
World GDP Capita GDP
(1n 2005 $)
India
359
14%
$308
4%
$858
Country or
Region
Population
(Millions)
Share of
Population
(Millions)
GDP
(Trillions of
$)
Share of
World GDP
Per Capita
GDP
India
1095
17%
$2.7
5%
$2,400
• 2006
Population
• 1950
Country or
Region
Population
(Millions)
Share of
Population
(Millions)
1950 GDP
(in billions
of 2005 $)
Share of
1950 Per
World GDP Capita GDP
(1n 2005 $)
Africa
227
9%
$281
4%
$1,238
Country 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
• 2006
Economy
Who were the gainers/losers
Economy
• 1950
Country or
Region
Population
(Millions)
Population
(Millions)
1950 GDP
(in billions
of 2005 $)
Share of
1950 Per
World GDP Capita GDP
(1n 2005 $)
USA
152
6%
$2,016
27%
$13,263
Country 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
• 2006
Economy
• 1950
Country or
Region
Population
(Millions)
Population
(Millions)
1950 GDP
(in billions
of 2005 $)
Share of
1950 Per
World GDP Capita GDP
(1n 2005 $)
Japan
84
3%
$223
3%
$2,655
Country or
Region
Population
(Millions)
Share of
Population
(Millions)
GDP
(Trillions of
$)
Share of
World GDP
Per Capita
GDP
Japan
128
2%
$4.0
7%
$31,000
• 2006
Economy
• 1950
Country or
Region
Population
(Millions)
Population
(Millions)
1950 GDP
(in billions
of 2005 $)
Share of
1950 Per
World GDP Capita GDP
(1n 2005 $)
China
547
22%
$332
4%
$607
Country or
Region
Population
(Millions)
Share of
Population
(Millions)
GDP
(Trillions of
$)
Share of
World GDP
Per Capita
GDP
China
1305
20%
$5.9
10%
$4,500
• 2006
Economy
• 1950
Country or
Region
Population
(Millions)
Share of
Population
(Millions)
1950 GDP
(in billions
of 2005 $)
Share of
1950 Per
World GDP Capita GDP
(1n 2005 $)
India
359
14%
$308
4%
$858
Country or
Region
Population
(Millions)
Share of
Population
(Millions)
GDP
(Trillions of
$)
Share of
World GDP
Per Capita
GDP
India
1095
17%
$2.7
5%
$2,400
• 2006
Economy & Population
• 1950
Country or
Region
Population
(Millions)
Share of
Population
(Millions)
1950 GDP
(in billions
of 2005 $)
Latin
America
166
8%
$576
8%
$3,470
Country or
Region
Population
(Millions)
Share of
Population
(Millions)
GDP
(Trillions of
$)
Share of
World GDP
Per Capita
GDP
Latin
America
549
9%
$4.8
8%
$8,700
• 2006
Share of
1950 Per
World GDP Capita GDP
(1n 2005 $)
Economy
• 1950
Country or
Region
Population
(Millions)
Share of
Population
(Millions)
1950 GDP
(in billions
of 2005 $)
Share of
1950 Per
World GDP Capita GDP
(1n 2005 $)
Africa
227
9%
$281
4%
$1,238
Country 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
• 2006
Population & Economy
• Taiwan
• 1956
Country or
Region
Population
(Millions)
Share of
Population
(Millions)
1950 GDP
(in billions
of 2005 $)
Share of
1956 Per
World GDP Capita GDP
(1n 2005 $)
Taiwan
9.4
.37
Country or
Region
Population
(Millions)
Share of
Population
(Millions)
GDP
(Trillions of
$)
Share of
World GDP
Per Capita
GDP
Taiwan
23
.36
.885
1%
$38,491
• 2011
GDP/Capita 2x to 1/3 above
• 1950
Country or
Region
Population
(Millions)
Share of
Population
(Millions)
1950 GDP
(in billions
of 2005 $)
Share of
1950 Per
World GDP Capita GDP
(1n 2005 $)
USA
152
6%
$2,016
27%
$13,263
Western
Europe
305
12%
$1,934
26%
$6,341
• 2006
Country 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
European
Mont. Union
314
5%
9.6
16%
$30,200
GDP/Capita 4X to 1/3 above
• 1950
Country or
Region
Population
(Millions)
Share of
Population
(Millions)
1950 GDP
(in billions
of 2005 $)
Share of
1950 Per
World GDP Capita GDP
(1n 2005 $)
USA
152
6%
$2,016
27%
$13,263
Japan
84
3%
$223
3%
$2,655
• 2006
Country
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
GDP/Capita 20X to 9X
• 1950
Country or
Region
Population
(Millions)
Population
(Millions)
1950 GDP
(in billions
of 2005 $)
Share of
1950 Per
World GDP Capita GDP
(1n 2005 $)
USA
152
6%
$2,016
27%
$13,263
China
547
22%
$332
4%
$607
• 2006
Country
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
GDP/Capita 14X to 14X
• 1950
Country or
Region
Population
(Millions)
Share of
Population
(Millions)
1950 GDP
(in billions
of 2005 $)
Share of
1950 Per
World GDP Capita GDP
(1n 2005 $)
USA
152
6%
$2,016
27%
$13,263
India
359
14%
$308
4%
$858
• 2006
Country
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
GDP/Capita 10X to 25X
• 1950
Country or
Region
Population
(Millions)
Share of
Population
(Millions)
1950 GDP
(in billions
of 2005 $)
Share of
1950 Per
World GDP Capita GDP
(1n 2005 $)
USA
152
6%
$2,016
27%
$13,263
Africa
227
9%
$281
4%
$1,238
• 2006
Country
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
Asia’s Rise—Africa’s Fall
• 1950
Country or
Region
Population
(Millions)
Share of
Population
(Millions)
1950 GDP
(in billions
of 2005 $)
Africa
227
9%
$281
4%
$1,238
China
547
22%
$332
4%
$607
India
359
14%
$308
4%
$858
• 2006
Share of
1950 Per
World GDP Capita GDP
(1n 2005 $)
Country
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
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