the global economic environment the coming boom wealthy industrial countries2.92.7 developing...
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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
Economic Systems
• Capitalist
• Socialist
• Mixed
Economic Freedom
An economic index with consideration of:
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
< $765
National ProductionNational Production
GrossGrossNationalNational
Product (GNP)Product (GNP)
GrossGrossDomesticDomestic
Product (GDP)Product (GDP)
Drawbacks of GNP and Drawbacks of GNP and
GDPGDP
Problem Problem of Averagesof Averages
UncountedUncountedTransactionsTransactions
PitfallsPitfallsof Comparisonof Comparison
Question Question of Growthof Growth
Estimate of GNP Per Capita at PPP (Selected Countries)
SelectedCountry
GNP Per Capita
PPP Estimate ofGNP Per Capita
(U.S. = 100)
United StatesSwitzerlandJapanCanadaRussiaMexicoNigeriaIndia
26,98040,63039,64019,380
2,2403,320
260340
26,98025,86022,11021,130
4,4806,4001,2201,400
Purchasing Power Parity
The Expanding Triad
European Economic Area
N. American Free Trade Area
Japan and the Tigers
Population(million)
GNP(billion)
GNPPer Capita
393$ 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
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
Big Emerging Markets: 2010
BEM (Total) $7,673 $2,082 19 35 51
CEA (Total) 2,724 1,853 7 17 21 China 1,952 1,357 5 15 20 Taiwan 512 21,115 1 1 <1
Hong Kong 259 34,837 1 <1 <1
Korea 925 18,212 2 2 1
Brazil 877 4,384 2 3 3
India 665 544 1 5 17
Mexico 545 4,389 1 2 2
Argentina 501 12,023 1 2 1
Russian Federation 466 2,976 1 2 2
Turkey 330 4,117 1 1 1
Indonesia 230 948 1 3 3
South Africa 208 3,679 1 1 1
Poland 201 4,864 1 1 1
GNP(billion)
GNPPer Capita
% ofWorldGNP
% of WorldPPP
% ofWorld
PopulationMarket
BOP (Balance of Payments)
1. Definition
2. Double entry system
+ (inflow)– (outflow)
BOP (cont’)
3. Current Account vs. Capital Account
4. Trade Balance
Ex: U.S. BOP, 1994-1997 (US$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