1. 1

2. Carl Liedholm
Professor, Economics 2

3. INTERNATIONAL ECONOMICS3

4. INTERNATIONAL TRADE
BASIC FACTS 4

5. Which of the following is true about the United States and its international trade role?
The world’s largest exporter in absolute terms
A relatively “closed” economy (X/GDP low)
Largest trading partner is China
Largest trading partner is Mexico
None of the above 5

6. WORLD EXPORTS – 2008 MERCHANDISE6

7. EXPORTS/GDP 7

8. U.S TRADING PARTNERS (Percent of US Exports) 20078

9. GLOBALIZATION OF TRADE9

10. 10

11. WORLD TRADE 25X WORLD OUTPUT 8X
GROWTH SINCE 1950
WORLD TRADE 25X
WORLD OUTPUT 8X 11

12. Expansion of Roman Empire
GLOBALIZATION
NOT A NEW PHENOMENON
Expansion of Roman Empire
Voyages of Discovery
End of Napoleonic Wars 12

13. PRIMARY DRIVING FORCES OF RECENT WAVE OF GLOBALIZATION
1. REDUCTION OF TRADE BARRIERS 13

14. Trade and welfare
slide 14 14

15. 2. TECHNOLOGICAL CHANGE 15

16. 3. EMERGENCE OF NEW COUNTRIES16

17. EFFECT ON JOBS 17

18. EFFECT ON TRADE BALANCE
IMPORTS NOW GREATLY EXCEED EXPORTS 18

19. U.S. FOREIGN TRADE DEFICIT 2008
CURRENT ACCOUNT DEFICIT
- $ 638 Billion
4.7 % of GDP 19

20. INTERNATIONAL ACCOUNTING
CURRENT ACCOUNT
(Goods and Services Transactions) +
FINANCIAL ACCOUNT
(Purchase and sale of Assets) = 20

21. INTERNATIONAL ACCOUNTING
CURRENT ACCOUNT
-$638 Billion +
FINANCIAL ACCOUNT
+$638 Billion (Liability to Foreigners) = 21

22. INTERNATIONAL FINANCE22

24. $ 24

25. The coins used in colonial America were primarily::
British (Shillings and Pounds)
Spanish (Pieces of Eight)
German (Thalers)
French (Ecus)
Dutch ( Ducatoons)

26. PRICE (RATIO)OF ONE CURRENCY IN TERMS OF ANOTHER
EXCHANGE RATE
PRICE (RATIO)OF ONE CURRENCY IN TERMS OF ANOTHER
L/$
CURRENCY ON BOTTOM KEY 26

27. 27

28. EFFECT OF FALLING DOLLAR
MAKES U.S. FIRMS MORE COMPETITIVE INTERNATIONALLY
DECREASES PRICE OF U.S. GOODS ABROAD
INCREASES PRICE OF IMPORTED GOODS 28

29. CRISIS 29