Chapter 13 International Trade Patterns Describing the evolving pattern of international commerce Documenting the emerging markets for global exports Examination of global trade flows in six major commodity groups

World Patterns of Trade (1) A clear trend towards rising exports/imports as a share of output (GDP)

World Patterns of Trade (2) Europe – many small countries with strong trade to other small countries, somewhat like trade among U.S. states US – a huge internal market

World Export Trends

World Exports by Category One year change Is very short, But the total Change (8%) Seems low Given the Data for Individual industries

The extreme position of the United States, a mixed picture for Europe, the need to view these data over time, which would not alter the U.S. position for the last several decades. China’s huge trade surplus: what to do with the money?

Major U.S. Trading Partners Geographic proximity; country economy size as explanations for level of trade. The notable absence of India from this table.

U.S. Commodity Imports and Exports

U.S. Trade in Services Unlike trade in goods, where the U.S. has a persistent trade deficit, the U.S. has a persistent trade surplus in services This is based on services involving intellectual property, finance, producer services, information services Implicit trade in services: government debt, in which foreigners hold huge reserves of US $

Key Trade Relations for Other Countries and Country Groups (1) Canada – Strong ties to the U.S., a “gravity model” outcome, exports dominated by “staples”, rapid growth in trade in services EU – Table 13.4, many small nations strongly tied to other EU countries, analogous to trade among state in the U.S. But a layer of countries with economic specialties traded globally – Germany: autos and machinery; France: food and wine; Italy: travel & mfg; UK – finance, ….. Latin America – strong exports of raw materials, linkages to Europe, strategies to promote “import substitution.” Mexico – the largest US trade partner – dominated by petroleum, manufacturing, but a huge tourist trade

Key Trade Relations for Other Countries and Country Groups (2) East Asia as the emergent source of exports in the last several decades – Japan after WW-II The 4 Tigers: Taiwan, South Korea, Singapore, Hong Kong – a view from the 1970’s to ca. 1990 Displaced by China, Vietnam, Indonesia, India, and other SE Asian countries in recent years as a source of manufactured goods exports Today a realization by the less developed countries in Asia that they must develop a robust producer services sector to be globally competitive; this is a huge challenge for the centrally planned economies.

Key Trade Relations for Other Groups of Countries (3) Australia – Small in population, rich in resources, the Colonial connection India – In some ways quite unique among large global economies (see next slide, from the previous edition of this text) South Africa – shifting from raw materials and manufacturing to services Russia – the rise of oligarchs, the stagnation of the economy in a global context, uncertainty of its future The Middle East – clearly dominated by OPEC, but new spinouts from oil wealth in services – hotels, airlines, new cities

India – Exports & Imports Very Different Mix of Imports And Exports Compared To other Countries In the text Does not capture the boom in services work being done in India – call centers, software, and a host of advanced service activities. Very strong higher education system – producing cadres of engineers & scientists

The next slides are from the previous edition of the textbook They are a reasonable proxy for current data

Trade Flows in Microelectronics Numbers in the text do not correspond to the values in this figure Dominated by Mexico And East Asia

Trade Flows in Automobiles Again, numbers in figure differ from those in the text Dropping as domestic production by Japanese firms rises Mostly From Mexico

Global Rise of Japanese Auto Manufacturers Figure 13.14documents the global production presence of GM and Ford

Global Trade in Steel Strong exports From Japan And EU: A capital- Intensive sector ?Lack of Intra-country data & data differ from text

Global Trade in Textiles and Clothing Clearly huge Exports from The developing World to all Developed Economies, due To labor Intensity See Figure 13.31

Global Trade in Grains and Feed Reduced trade in grains and feeds as many nations have developed capacity in these sectors Exports partly governed by global climate and opportunities to exploit scale economies in areas with high yields

Trade in Non-oil Commodities Includes: metals, ores, crude rubber, wood and pulp, hides, cotton fiber & other textile fibers, crude animal and vegetable materials As in the colonial past, developing countries are the primary sources of these commodities, but resource-rich developed economies such as the U.S. and Canada also have significant exports II