Cooperation as the Foundation for International Trade Philip L. Miller 10/25/2006

2 Confidential, internal use only Cooperation as the Foundation for International Trade  In a world of limited resources Economic Cooperation and Economic  In a pure capitalist environment  With the conceptual contribution of John Nash and his Nash equilibrium

3 Confidential, internal use only Classical Ricardian Example Gains From Specialization: Before Specialization England PortugalWorld Output Cloth 100 Workers = 1 unit 90 Workers = 1 unit 2 units Wine 120 Workers = 1 unit 80 Workers = 1 unit 2 units After Specialization Cloth 220 Workers = 220/100 units 2.2 units Wine170 workers = 170/80 units units Source: Takayama, Akira; International Trade, Holt Rinehart and Winston, inc p. 112.

4 Confidential, internal use only Role of The Broker/Consultant Two Bargaining Participants Country 1 Country II Cooperative Equilibrium Ricardian Optimization Benefit from Cooperation

5 Confidential, internal use only The Necessity of International Cooperation

6 Confidential, internal use only Basic Questions  I have been asked today to address the following questions  I will answer these questions in a somewhat inside out manner, by asking a slightly different set of questions:

7 Confidential, internal use only Part I: The U.S. Economy 1996 to 2001

8 Confidential, internal use only U.S. Economy 1996 to 2001  I will begin by looking first at the history of the U.S. economy from 1996 to 2001.

9 Confidential, internal use only Key Question

10 Confidential, internal use only Why did the Fed Take Such Drastic Action Friedman's curve

11 Confidential, internal use only The Friedman Curve

12 Confidential, internal use only Part II The Global Economy

13 Confidential, internal use only Globalization

14 Confidential, internal use only Globalization Problems

15 Confidential, internal use only Interest Rate Increases World Wide

16 Confidential, internal use only World Interest Rate Increases

17 Confidential, internal use only The Unification of Many Economies

18 Confidential, internal use only Thank you