The Growth of Globalization

Since the end of WWII, world trade has grown much faster than world output

Openness Index = (Exports + Imports)/GNP

The index is a measure of trade

Since 1945 (over 64 years) (Exports + Imports) > GWP

GNP = gross national product GWP = gross world product

Openness Index for select nations over time

graph taken from James Gerber, 2008, International Economics, 4th

Edition, Pearson Education

The U.K., and the European Continent have traditionally been open nations

The Dutch international trade patterns have traditionally been leading others Traditional Dutch flower auctions Engines Services Processing & packaging produce Amsterdam & other import/export

centers

France and Germany

French agriculture -- processingoBut “common agricultural policy”

import protection --- is a contention in World trade Organization negotiations

German engineering & manufacturing

Movement to common market Western market relative to the

Russian market – do East European nations go west or go to Russia?

Japanese export expansion

Export expansion policies and exchange rate policy

Imports come into Japan primarily via state import houses -- import restrictions

Efficient manufacturing to reduce cost of exports to other nations

China and other Asian nation

export expansion policiesChina -- exchange rate policy and

export expansion policies --- manufacturing

Taiwan – export expansion policies and manufacturing efficiency

Singapore – the “city state” --- assembly and manufacturing center

Malaysia – textiles, syntheticsHong Kong – trade center --- HK has

their own currency separate of the PRC

The U. S.

Not really an open trade state until the close of the gold window in 1973

The big market --- so imports loom large

FDI – foreign direct investment by U.S. firms

U. S. agriculture now an exporting force

Inputs come in from all over the world to U.S. manufacturing

Isolationist and high tariff policies during the 1930’s – 1950’s

Issues in the international economy

TRADE DEFICITS REGIONAL TRADE

AGREEMENTS RESOLUTION OF TRADE

CONFLICTS GAINS FROM TRADE –

DEVELOPED VS. DEVELOPING NATIONS

THE ROLE OF INTERNATIONAL INSTITUTIONS

EXCHANGE RATES & THE MACROECONOMY

FINANCIAL CRISES CRISES & REFORM IN

LATIN AMERICA DEBT & CAPITAL FLOWS EXPORT EXPANSION CHINA & INDIA COME

TO TOWN WHAT OF THE EASTERN

EUROPEAN NATIONS? WHAT ABOUT RUSSIA WHAT’S TO BECOME OF

THE ENVIRONMENT & THE RULE ON NATURAL RESOUCES?