Ch. 1 Introduction, continued
description
Transcript of Ch. 1 Introduction, continued
Ch. 1 Introduction, continued
• Economic Geography of the World Economy
• Globalization
• Globalization versus local diversity
• Problems of World Development
GDP Per Capita
GDP = Consumption + Investment + Government
Figure 1.7 The Global North and the Global South
Variations in Economic Structure Gross National Income
Source: World Bank (2012) World Development Indicators
GNI (Gross National Income) = GDP + foreign income receipts(such as dividends and interest) – foreign income payments
Population GNI/Capita
% Growth per capita income
2008-2009
GNI at Purchasing
Power ParityLow Income 846 $509 2.4% $1,220Middle Income 4813 $3,397 1.5% $6,730High Income 1117 $37,990 -3.9% $36,213World 6775 $8,732 3.0% $10,594-
Income Inequality
Source: Wikipedia, but attributed to the World Bank
Calculating Gini Coefficient
The graph shows that the Gini coefficient is equal to the area marked A divided by the sum of the areas marked A and B. that is, Gini = A / (A + B). It is also equal to 2*A due to the fact that A + B = 0.5 (since the axes scale from 0 to 1).
Global Shares of Population and Gross National Income (2009)
1%
28%
72%
12%
71%
16%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Low Income
Middle Income
High Income
% of Population
% of GNI
Structure of Production (% of GDP)
Growing Inequality
Hollowing ofIndustry Decrease in
Agriculture, Services Growth
Share of Global GDP/GNI Agriculture Agriculture Industry Industry Services Services
1965 2008 1965 2008 1965 2008 2003 2008Low 9% 3% 44% 25% 28% 29% 28% 46%Middle 12% 28% 19% 10% 34% 37% 45% 53%High 79% 69% 5% 1% 43% 26% 54% 73%World $1,759 $60,587 10% 3% 40% 28% 51% 69%
The Clark-Fisher Model of Structural Change
Time
Share
of
Ou
tpu
t
Agriculture
Manufacturing
Services
Is This Model Inevitable?
Distribution of Gross Domestic Product (%)
Why so high &why the decline?
GDP = Final Sales to Government, Consumers & Investment
GlobalIncrease in Trade
Note: 2008 Exports includes services
Consumption Investment Government Exports1965 2008 1965 2008 1965 2008 1965 2008
Low 70% 75% 19% 27% 11% 9% 7% 29%Middle 67% 56% 22% 30% 11% 14% 17% 29%High 61% 62% 17% 21% 22% 18% 13% 26%Japan 59% 57% 28% 24% 12% 18% 11% 14%U.S. 63% 70% 12% 19% 25% 16% 6% 11%World 63% 61% 18% 22% 19% 17% 12% 27%
Imports/Exports 2006 ($ billions)
High Income havemuch stronger tradein services than Low and Middle Income
The U.S. Share ofServices Trade isvery high
Total Merchandise ServicesExports Imports Exports Imports Exports Imports
Low 434 512 323 389 111 123Middle 3771 3456 3312 2958 459 498High 10651 10955 8451 8985 2200 1970Japan 765 714 650 580 115 134U.S. 1436 2227 1038 1919 398 308World 14852 14908 12085 12327 2767 2581
Structure of Merchandise Exports (%)
Fuels,Minerals,Metals
OtherPrimary
Commodities
Machinery&
TransportEquipment
Other Mfg. Textiles &Clothing
1965 1992 1965 1992 1965 1992 1965 1992 1965 1992LowIncome
16 21 60 17 1 9 23 53 12 26
MiddleIncome
27 32 46 19 14 18 13 31 3 10
OilExporters
80 92 16 2 0 1 3 5 0.1 1
HighIncome
9 7 21 11 31 43 39 39 7 5
U.S. 8 6 27 14 37 48 28 32 3 2J apan 2 1 7 1 31 66 60 31 17 2World 15 13 26 13 25 37 34 38 7 6
Food FuelsOtherPrimaryCommodities
Machinery&TransportEquipment
Other Mfg.
1965 1992 1965 1992 1965 1992 1965 1992 1965 1992LowIncome
20 9 5 9 8 9 31 34 34 40
MiddleIncome
15 11 8 10 11 6 30 38 34 35
OilExporters
22 15 2 2 5 5 32 40 40 39
HighIncome
19 10 11 9 20 6 19 35 31 41
U.S. 19 6 10 11 20 4 14 41 36 38
Structure of Merchandise Imports (%)
IndustrialMarket
Economies
NonreportingNonmember
High Income OilExport
DevelopingCountries
(From/To) 1965 1985 1965 1985 1965 1985 1965 1985All Trade:Developing 67 63 8 7 1 2 25 30High Income OilEx.
70 59 (.) (.) 3 1 27 40
IndustrialMarket
70 71 2 2 1 3 27 24
ManufacturesDeveloping 47 56 19 8 2 4 32 32High Income OilEx.
30 47 0 0 21 16 49 36
IndustrialMarket
66 70 2 2 1 3 31 25
Origin and Destination of Merchandise Exports (%)
Globalization
• “Essentially an expansion in the scope, scale, and velocity of international transacations” p. 12
• Culture and consumption
• Telecommunications
• Economic Dimensions – finance, TNC’s, FDI, regional specialization in production, tertiary sector, office activity, tourism
TNC Sales and Selected Country GDP
FDI in the U.S. – similar diagram could be drawn for any country
Another view of FDI
An Example of Global Trade –United’s Business First Amenity Kit
China, USA, Thailand
Globalization vs. Local Diversity
• The desire to preserve local diversity
• But the inevitable outside pressures
• Producing “glocalization”
Problems In World Development
• Structural changes in low, medium & high income countries
• Environmental Constraints
• Disparities in wealth and well-being– Internal trends: growing income disparity in
many nations– The cycle of poverty– The Core-Periphery Model – developed in
chapter 14
The Cycle of Poverty in Third-World Countries