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 – Production of goods and services – Valued at constant prices – Designate one year as base year – Not affected by changes in prices 7

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 1526%$2,01627%$13,263 Western Europe 30512%$1,93426%$6,341 Former USSR 1717%$70710%$4,135 Latin America 1668%$5768%$3,470 Japan843%$2233%$2,655 China54722%$3324%$607 India35914%$3084%$858 Africa2279%$2814%$1,238 World2,524100%$7,382100%$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

Changes in Technology

What was it like at the start of the 21 st Century?

Population Country or Region Population (Millions) Share of Population (Millions) GDP (Trillions of $) Share of World GDP Per Capita GDP World6,446100%$ %$9,000 Country or Region Population (Millions) Share of Population (Millions) 1950 GDP (in billions of 2005 $) Share of World GDP 1950 Per Capita GDP (1n 2005 $) World2,524100%$7,382100%$2,925

Population Country or Region Population (Millions) Share of Population (Millions) GDP (Trillions of $) Share of World GDP Per Capita GDP USA2965%$12.822%$42,600 Country or Region Population (Millions) Share of Population (Millions) 1950 GDP (in billions of 2005 $) Share of World GDP 1950 Per Capita GDP (1n 2005 $) USA1526%$2,01627%$13,263

Population Country or Region Population (Millions) Share of Population (Millions) GDP (Trillions of $) Share of World GDP Per Capita GDP China130520%$5.910%$4,500 Country or Region Population (Millions) Share of Population (Millions) 1950 GDP (in billions of 2005 $) Share of World GDP 1950 Per Capita GDP (1n 2005 $) China54722%$3324%$607

Population Country or Region Population (Millions) Share of Population (Millions) GDP (Trillions of $) Share of World GDP Per Capita GDP India109517%$2.75%$2,400 Country or Region Population (Millions) Share of Population (Millions) 1950 GDP (in billions of 2005 $) Share of World GDP 1950 Per Capita GDP (1n 2005 $) India35914%$3084%$858

Population Country or Region Population (Millions) Share of Population (Millions) GDP (Trillions of $) Share of World GDP Per Capita GDP Africa75312%$1.42%$1,700 Country or Region Population (Millions) Share of Population (Millions) 1950 GDP (in billions of 2005 $) Share of World GDP 1950 Per Capita GDP (1n 2005 $) Africa2279%$2814%$1,238

Economy

Who were the gainers/losers

Economy Country or Region Population (Millions) Share of Population (Millions) GDP (Trillions of $) Share of World GDP Per Capita GDP USA2965%$12.822%$42,600 Country or Region Population (Millions) 1950 GDP (in billions of 2005 $) Share of World GDP 1950 Per Capita GDP (1n 2005 $) USA1526%$2,01627%$13,263

Economy Country or Region Population (Millions) Share of Population (Millions) GDP (Trillions of $) Share of World GDP Per Capita GDP Japan1282%$4.07%$31,000 Country or Region Population (Millions) 1950 GDP (in billions of 2005 $) Share of World GDP 1950 Per Capita GDP (1n 2005 $) Japan843%$2233%$2,655

Economy Country or Region Population (Millions) Share of Population (Millions) GDP (Trillions of $) Share of World GDP Per Capita GDP China130520%$5.910%$4,500 Country or Region Population (Millions) 1950 GDP (in billions of 2005 $) Share of World GDP 1950 Per Capita GDP (1n 2005 $) China54722%$3324%$607

Economy Country or Region Population (Millions) Share of Population (Millions) GDP (Trillions of $) Share of World GDP Per Capita GDP India109517%$2.75%$2,400 Country or Region Population (Millions) Share of Population (Millions) 1950 GDP (in billions of 2005 $) Share of World GDP 1950 Per Capita GDP (1n 2005 $) India35914%$3084%$858

Economy & Population Country or Region Population (Millions) Share of Population (Millions) GDP (Trillions of $) Share of World GDP Per Capita GDP Latin America 5499%$4.88%$8,700 Country or Region Population (Millions) Share of Population (Millions) 1950 GDP (in billions of 2005 $) Share of World GDP 1950 Per Capita GDP (1n 2005 $) Latin America 1668%$5768%$3,470

Economy Country or Region Population (Millions) Share of Population (Millions) GDP (Trillions of $) Share of World GDP Per Capita GDP Africa75312%$1.42%$1,700 Country or Region Population (Millions) Share of Population (Millions) 1950 GDP (in billions of 2005 $) Share of World GDP 1950 Per Capita GDP (1n 2005 $) Africa2279%$2814%$1,238

Population & Economy Taiwan Country or Region Population (Millions) Share of Population (Millions) GDP (Trillions of $) Share of World GDP Per Capita GDP Taiwan %$38,491 Country or Region Population (Millions) Share of Population (Millions) 1950 GDP (in billions of 2005 $) Share of World GDP 1956 Per Capita GDP (1n 2005 $) Taiwan9.4.37

GDP/Capita 2x to 1/3 above Country or Region Population (Millions) Share of Population (Millions) GDP (Trillions of $) Share of World GDP Per Capita GDP USA2965%$12.822%$42,600 European Mont. Union 3145%9.616%$30,200 Country or Region Population (Millions) Share of Population (Millions) 1950 GDP (in billions of 2005 $) Share of World GDP 1950 Per Capita GDP (1n 2005 $) USA1526%$2,01627%$13,263 Western Europe 30512%$1,93426%$6,341

GDP/Capita 4X to 1/3 above Country or Region Population (Millions) Share of Population (Millions) GDP (Trillions of $) Share of World GDP Per Capita GDP USA2965%$12.822%$42,600 Japan1282%$4.07%$31,000 Country or Region Population (Millions) Share of Population (Millions) 1950 GDP (in billions of 2005 $) Share of World GDP 1950 Per Capita GDP (1n 2005 $) USA1526%$2,01627%$13,263 Japan843%$2233%$2,655

GDP/Capita 20X to 9X Country or Region Population (Millions) Share of Population (Millions) GDP (Trillions of $) Share of World GDP Per Capita GDP USA2965%$12.822%$42,600 China130520%$5.910%$4,500 Country or Region Population (Millions) 1950 GDP (in billions of 2005 $) Share of World GDP 1950 Per Capita GDP (1n 2005 $) USA1526%$2,01627%$13,263 China54722%$3324%$607

GDP/Capita 14X to 14X Country or Region Population (Millions) Share of Population (Millions) GDP (Trillions of $) Share of World GDP Per Capita GDP USA2965%$12.822%$42,600 India109517%$2.75%$2,400 Country or Region Population (Millions) Share of Population (Millions) 1950 GDP (in billions of 2005 $) Share of World GDP 1950 Per Capita GDP (1n 2005 $) USA1526%$2,01627%$13,263 India35914%$3084%$858

GDP/Capita 10X to 25X Country or Region Population (Millions) Share of Population (Millions) GDP (Trillions of $) Share of World GDP Per Capita GDP USA2965%$12.822%$42,600 Africa75312%$1,42%$1,700 Country or Region Population (Millions) Share of Population (Millions) 1950 GDP (in billions of 2005 $) Share of World GDP 1950 Per Capita GDP (1n 2005 $) USA1526%$2,01627%$13,263 Africa2279%$2814%$1,238

Asia’s Rise—Africa’s Fall Country or Region Population (Millions) Share of Population (Millions) GDP (Trillions of $) Share of World GDP Per Capita GDP Africa75312%$1.42%$1,700 China130520%$5.910%$4,500 India109517%$2.75%$2,400 Country or Region Population (Millions) Share of Population (Millions) 1950 GDP (in billions of 2005 $) Share of World GDP 1950 Per Capita GDP (1n 2005 $) Africa2279%$2814%$1,238 China54722%$3324%$607 India35914%$3084%$858

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