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Macro-Scale: A Global Triad
3 large producing and trading regions: Europe, North America, and East and South East Asia — “3 legged collossus”
triad = 85% GDP and trade
shifting towards Asia (fast-growing economies)
National-Scale: World Manufacturing Activity, 2011
Brazil growing for production, Germany = largest European producer, China, U.S., Germany, and Japan = 50% of the world’s manufacturing activity
Canada losing its relative share of activity
Structural Changes in World Production, 1970-2008
manufacturing value added = $ outputs - $ inputs
slowly declining slope for Europe and North America
Asia doubling share
more developing countries holding greater shares of manufacturing
Diverging Trajectories: US — China, 1970-2018
US’s % of total world manufacturing drops from 25% to 20% while China moved from less than 5% to almost 20%
1978: China’s economy reforms under Deng Xiaping
opens up to foreign capital and privatization of state-owned enterprise
transportation and labor costs decreasing → MNCs move in
Annual Growth in Manufacturing, 1980 - 2003
minimal growth in western Europe, formerly soviet countries growing, Asia growing minus Japan (went bankrupt in 90s, could’ve grown an economy stronger than China’s if it weren’t for the “lost decade” 90s halt)
Global Patterns of Manufacturing
Europe, North America and East Asia = roughly 85% of manufacturing production —- U.S., Japan, and Germany dominated much of the 20th C
Growing importance of NIEs — Brazil, Russia, India, China (BRICs)
China led the way — growth of manufacturing in East and Southeast Asia outpaces all other regions
Map of World Merchandise Trade, 2011
more imports than exports in U.S.
Global Triad still evident
China, US, Germany, Japan = 30% trade value
middle east exports lots of oil and gas
primary resources diversify trade flow
Net Merchandise Trade Balances, 2012
Trade balances: surplus → $ exports > $ imports, deficit imports > exports
China and Germany — trade surplus
U.S., UK and France — trade deficit
How sustainable is it. for the U.S. to have such a deficit?
could lead to a recession but also only accounts for goods, not services
Network of World Merchandise Trade, 2012
CIS = commonwealth independent states (formerly Soviet) has more external trade than internal, Europe has more internal than external, North America has more external, and Asia is about half and half but has more internal
Three primary trading regions
Europe (EU), East and Southeast Asia (ASEAN) and North America (NAFTA)
most world trade is either within or between these three blocks
Merchandise Trade Trends over time
trade growth faster than output growth
growing interconnectedness
NIEs experienced the strongest trade growth
the rise of China as a world mega-trader