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• 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
