The Global Economic Environment
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Transcript of The Global Economic Environment
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The Global Economic Environment
The Coming Boom
Wealthy Industrial Countries 2.9 2.7
Developing Countries 3.0 4.8
East Asia 7.5 7.6
South Asia 4.8 5.3
Latin America 2.6 3.4
Eastern Europe* 1.0 2.7
Sub-Saharan Africa 2.0 3.9
Middle East & North Africa 1.2 3.8
*Includes former Soviet Union
1974-1993
1994-2003
Real GDP growth, annual average %Source: World Bank, The Economist
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Economic Systems
• Capitalist
• Socialist
• Mixed
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Economic Freedom
An economic index with consideration of:
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Country Income Segmentation
High Income (Advanced Countries) - Triad - Others
Upper Middle Income (NIC's) Lower Middle Income (DC's)
Low Income (LDC's)
+ $9,385
+ $3,036
+ $765
< $765
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National ProductionNational Production
GrossGrossNationalNational
Product (GNP)Product (GNP)
GrossGrossDomesticDomestic
Product (GDP)Product (GDP)
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Drawbacks of GNP and Drawbacks of GNP and
GDPGDP
Problem Problem of Averagesof Averages
UncountedUncountedTransactionsTransactions
PitfallsPitfallsof Comparisonof Comparison
Question Question of Growthof Growth
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Estimate of GNP Per Capita at PPP (Selected Countries)
SelectedCountry
GNP Per Capita
PPP Estimate ofGNP Per Capita
(U.S. = 100)
United StatesSwitzerlandJapanCanadaRussiaMexicoNigeriaIndia
26,98040,63039,64019,380
2,2403,320
260340
26,98025,86022,11021,130
4,4806,4001,2201,400
Purchasing Power Parity
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The Expanding Triad
European Economic Area
N. American Free Trade Area
Japan and the Tigers
Population(million)
GNP(billion)
GNPPer Capita
393$ 8,354 $ 21,248
284 $ 19,831
374$ 8,293 $ 22,134
U.S., Canada, Mexico
Hong Kong, Japan, Malaysia, Singapore, South Korea, Taiwan, Thailand
1997 figures
% of World: 7%30%
% of World: 5%21%
% of World: 7%30%EU: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, U.K.
EFTA: Iceland, Switzerland
$ 5,638
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Big Emerging Markets: 1997
BEM (Total) $4,248 $1,388 15 29 52
CEA (Total) 1,318 1,046 5 12 22 China 890 723 3 11 21 Taiwan 268 12,263 1 1 <1
Hong Kong 160 25,225 1 <1 <1
Brazil 590 3,591 2 3 3
Korea, Rep. 512 11,218 2 2 1
India 352 365 1 4 17
Mexico 318 3,323 1 2 2
Russian Federation 301 2,018 1 2 3
Argentina 297 8,336 1 1 1
Turkey 184 2,896 1 1 1
South Africa 134 3,096 1 1 1
Indonesia 133 667 1 2 3
Poland 108 2,770 <1 1 1
GNP(billion)
GNPPer Capita
% ofWorldGNP
% of WorldPPP
% ofWorld
PopulationMarket
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Big Emerging Markets: 2010
BEM (Total) $7,673 $2,082 19 35 51
CEA (Total) 2,724 1,853 7 17 21 China 1,952 1,357 5 15 20 Taiwan 512 21,115 1 1 <1
Hong Kong 259 34,837 1 <1 <1
Korea 925 18,212 2 2 1
Brazil 877 4,384 2 3 3
India 665 544 1 5 17
Mexico 545 4,389 1 2 2
Argentina 501 12,023 1 2 1
Russian Federation 466 2,976 1 2 2
Turkey 330 4,117 1 1 1
Indonesia 230 948 1 3 3
South Africa 208 3,679 1 1 1
Poland 201 4,864 1 1 1
GNP(billion)
GNPPer Capita
% ofWorldGNP
% of WorldPPP
% ofWorld
PopulationMarket
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BOP (Balance of Payments)
1. Definition
2. Double entry system
+ (inflow)– (outflow)
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BOP (cont’)
3. Current Account vs. Capital Account
4. Trade Balance
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Ex: U.S. BOP, 1994-1997 (US$B)
1994 1995 1996 1997
A. Current Account -123.21 -115.22 -135.44 -155.38
1. Goods: Export FOB 504.45 577.69 613.89 681.27
2. Goods: Imports FOB -668.59 -749.57 -803.32 -877.28
3. Balance on Goods -164.14 -171.88 -189.43 -196.01
4. Services: Credit 199.25 217.80 236.71 256.06
5. Services: Debit -132.45 -141.98 -152.00 -166.09
6. Balance on Goods and
Services
-97.34 -96.06 -104.72 -106.04
B. Capital Account -.60 .10 .52 .16
Total A + B -123.81 -115.12 -134.91 -155.22
Trade Deficit
Reserve