1. CDAE 272 International Economic Development Spring 2008

2. Class 03 Jan. 22 Last class: 1. Introduction Today: 1. Introduction Next class: 2. Measuring economic growth & development Quiz 1 Reading: Reading package: Introduction Important date: Quiz 1: Thursday, January 24

3. What is going on in the global economy? Changes in major stock markets yesterday (Mon, Jan. 21, 2008): India↓ 7.4% Hong Kong ↓ 5.5%* Japan ↓ 3.9% China ↓ 5.1% Germany ↓ 4.2% France↓ 4.7% Question: what will be the change in U.S. stock markets today?

4. 1. Introduction 1.1. Economic growth and globalization 1.2. Rapid growth in world trade 1.3. Development patterns of selected nations 1.4. The U.S. economy and international trade 1.5. Potentials and challenges

5. 1.1. Economic growth and globalization 1.1.1. Economic growth and indicators (4) Growth rate -- how to calculate growth rate? Examples: If the per capita GNP increased from $2000 in 2000 to $2050 in 2001, what was the growth rate? How about if it dropped from $2050 in 2001 to $2000 in 2002? Another example: if the per capita GNP increased from $1000 in 1990 to $1464 in 1994, what is the average annual growth rate?

6. 1.1. Economic growth and globalization 1.1.1. Economic growth and indicators (5) Other indicators Life expectancy Death rate Index of happiness ……

7. 1.1. Economic growth and globalization 1.1.2. World economic growth since 1970 See the slides from CDAE272class02B

8. 1.1. Economic growth and globalization 1.1.3. Economic globalization -- International trade -- Foreign investment -- Labor export and import -- Technologies 1.1.4. Globalization and anti-globalization -- Factors that have contributed to globalization -- Who are better off and who are wore off? -- What are the trends?

9. 1.2. Rapid growth in world trade 1.2.1. International trade and indicators -- Exports and imports -- Trade deficit or surplus Balance of trade = Exports - Imports -- Trade barriers -- Index of openness -- How to calculate the index? = Export / GDP -- How can it be greater than 100%? -- Economic freedom index

10. U.S. balance of trade

11. China’s exports and imports ($ bil)

12. Index of openness (exports/GDP) 1980 1998 China (mainland) 6% 22% India 6% 12% Indonesia 34% 28% Egypt 31% 17% Hong Kong 90% 125% Canada 28% 41% UK 27% 29% USA 10% 12% Japan 14% 19% Singapore 215% 187%