What Does the World Trade?

• Biggest traded category: manufactures

• Fastest growing, then shrinking, then growing: “fuels & mining”

Why?

• Because this is the value of trade, and prices of oil and other raw materials were rising, and then falling.

But within Manufactures, Iron & Steel is even more volatile:

What Does the World Trade?($ b. 2013 & annual % growth rates, merchandise exports)

	Value	00-05	05-13
All Products	17,590
Agriculture	1,745			–12
Fuel&Mining	3,997			–36				–3
Manuf.	11,848			–20
Iron & Steel				–45			–8	–6

Source: WTO, International Trade Statistics, 2014, Table II.1

 

Reason: Very sensitive to investment, thus to expansion and contraction.

What Does the World Trade?($ b. 2013 & annual % growth rates, merchandise exports)

	Value	00-05	05-13
All Products	17,590
Agriculture	1,745			–12
Fuel&Mining	3,997			–36				–3
Manuf.	11,848			–20
Iron & Steel				–45			–8	–6
Automotive	1,348			–31

Source: WTO, International Trade Statistics, 2014, Table II.1

What Does the US Trade?($ b. 2011)

	Exports	Imports
Total	1,497.4	2,235.8
Agriculture	140.0
Petroleum		462.3
Industrial supplies	496.4	319.8
Capital goods, exc. auto	493.2	513.4
Automotive	133.1	255.2
Other non-ag	234.6
Other non-petrol		685.1

Source: Economic Report of the President, Feb 2013, Table B-104.

 

What Does the US Trade?

US imports are much larger than US exports (We’ll see what that means later in the course.)

US is a big…

-Exporter of agricultural products

-Importer of oil

-Exporter and importer of capital goods (i.e., machines for making things)

Importance of Trade for Countries? (GDP in US$ b., Exports % of GDP, Selected countries, 2012)

	GDP	Exports/GDP
United States		9%
Japan		14%
Germany		42%
Canada		25%
India		19%
Mexico		28%
Netherlands		80%
Singapore		139%
Philippines		17%
Nepal		5%

Source: CIA World Fact Book

 

Importance of Trade for Countries?

• Even though we trade more than most, US trade is a smaller part of US GDP than for many other countries

• Others that are low: Japan, Nepal (even lower than US)

• Note Singapore: Exports can be more than GDP.

– Reason: Exports are made using imported inputs, so value of exports includes imports.

 

Importance of Trade for Countries?A Few More of Interest

	GDP	Exports/GDP
China		24%
Hong Kong		168%
Korea, South		47%
Korea, North (2009)		7%
Burma		15%
Syria		6%
Israel		22%

Source: CIA World Fact Book

 

• Ways that countries interact economically

– Capital Flows

• Financial (holdings of financial assets abroad)

• Currency

• Bank deposits

• Bonds – private and government

• Stocks

• Bank loans

• Real (international ownership of real assets)

» Real estate

» Capital assets (plant and equipment)

» Stocks (equities) if ownership share is large

» Other

Data, below, are stocks (i.e, amounts at a point in time)

US Investment Position ($ trillion at market value, year-end 2011)

	We “Own” US Assets Abroad	We “Owe” Foreign Assets in US
Total	16.43	20.58
US Gov’t	0.71	4.28
Private financial	11.03	13.40
Private real	4.68	2.91

Source: Economic Report of the President, Feb 2013, Table B-107

Compare: US GDP in 2012 = $16.02 trillion

US Investment Position

• (Qualification: “Owe” isn’t quite right. This includes all assets in the US owned by foreigners, including land, buildings, etc. Not just what we’ve borrowed.)

• Lessons:

– US is a large net “debtor” (result of our spending more than we earn)

Most of this today is government, but some is private

 

• Other ways that countries interact economically

– Migration

• Temporary

– Guest workers

– Day workers

• Permanent

• In practice, most (all?) countries limit migration severely