Ebook International economics (11th edition): Part 2

(BQ) Part 2 book International economics has contents: Balance of payments, foreign exchange markets and exchange rates, the price adjustment mechanism with flexible and fixed exchange rates, the income adjustment mechanism and synthesis of automatic adjustments,...and other contents.

Salvatore p03.tex V2 - 10/13/2012 The Balance of Payments, Foreign Exchange Markets, and Exchange Rates part Part Three (Chapters 13, 14, and 15) deals with balance of payments, foreign exchange markets, and exchange rate determination A clear grasp of the material in these three chapters is crucial for understanding Part Four, which covers adjustment to balance-of-payments disequilibria, open-economy macroeconomics, and the functioning of the present international monetary system Chapter 13 examines the meaning, function, and measurement of the balance of payments and defines the concepts of deficit and surplus in a nation’s balance of payments Besides presenting the theory, Chapter 14 also examines the actual operation of foreign exchange markets; therefore, it is of great practical relevance for all students of international economics, particularly business majors Chapter 15 then deals with modern exchange rate theories and exchange rate determination based on the monetary and the asset market approach to the balance of payments 395 12:36 A.M Page 395 Salvatore p03.tex V2 - 10/13/2012 12:36 A.M Page 396 Salvatore c13.tex V2 - 11/15/2012 Balance of Payments chapter LEARNING GOALS: After reading this chapter, you should be able to: • Understand what the balance of payments is and what it measures • Describe the change in the U.S balance of payments over the years • Understand the importance of the serious deterioration of the trade balance and net international investment position of the United States in recent years 13.1 Introduction In Parts One and Two, we dealt with the “real,” as opposed to the monetary, side of the economy Money was not explicitly considered, and the discussion was in terms of relative commodity prices We now begin our examination of the monetary aspects of international economics, or international finance Here, money is explicitly brought into the picture, and commodity prices are expressed in terms of domestic and foreign currency units We begin our discussion of international finance by examining the balance of payments The balance of payments is a summary statement in which, in principle, all the transactions of the residents of a nation with the residents of all other nations are recorded during a particular period of time, usually a calendar year The United States and some other nations also keep such a record on a quarterly basis The main purpose of the balance of payments is to inform the government of the international position of the nation and to help it in its formulation of monetary, fiscal, and trade policies Governments also regularly consult the balance of payments of important trade partners in making policy decisions The information contained in a nation’s balance of payments is also indispensable to banks, firms, and individuals directly or indirectly involved in international trade and finance The definition of the balance of payments just given requires some clarification First of all, it is obvious that the literally millions of transactions of the residents of a nation with the rest of the world cannot appear individually in the balance 397 7:50 A.M Page 397 Salvatore c13.tex V2 - 11/15/2012 398 Balance of Payments of payments As a summary statement, the balance of payments aggregates all merchandise trade into a few major categories Similarly, only the net balance of each type of international capital flow is included Furthermore, the balance of payments includes some transactions in which the residents of foreign nations are not directly involved—for example, when a nation’s central bank sells a portion of its foreign currency holdings to the nation’s commercial banks An international transaction refers to the exchange of a good, service, or asset (for which payment is usually required) between the residents of one nation and the residents of other nations However, gifts and certain other transfers (for which no payment is required) are also included in a nation’s balance of payments The question of who is a resident of a nation also requires some clarification Diplomats, military personnel, tourists, and workers who temporarily migrate are residents of the nation in which they hold citizenship Similarly, a corporation is the resident of the nation in which it is incorporated, but its foreign branches and subsidiaries are not Some of these distinctions are, of course, arbitrary and may lead to difficulties For example, a worker may start by emigrating temporarily and then decide to remain abroad permanently International institutions such as the United Nations, the International Monetary Fund (IMF), the World Bank, and the World Trade Organization (WTO) are not residents of the nation in which they are located Also to be remembered is that the balance of payments has a time dimension Thus, it is the flow of goods, services, gifts, and assets between the residents of a nation and the residents of other nations during a particular period of time, usually a calendar year In this chapter, we examine the international transactions of the United States and other nations In Section 13.2, we discuss some accounting principles used in the presentation of the balance of payments In Section 13.3, we present and analyze the international transactions of the United States for the year 2011 Section 13.4 then examines some accounting balances and the concept and measurement of balance-of-payments disequilibrium Section 13.5 briefly reviews the postwar balance-of-payments history of the United States Section 13.6 then examines the international investment position of the United States The appendix presents the method of measuring the balance of payments that all nations must use in reporting to the International Monetary Fund This ensures consistency and permits international comparison of the balance of payments of different nations 13.2 Balance-of-Payments Accounting Principles In this section, we examine some balance-of-payments accounting principles as a necessary first step in the presentation of the international transactions of the United States We begin with the distinction between credits and debits, and then we examine double-entry bookkeeping 13.2A Credits and Debits International transactions are classified as credits or debits Credit transactions are those that involve the receipt of payments from foreigners Debit transactions are those that involve the making of payments to foreigners Credit transactions are entered with a positive sign, and debit transactions are entered with a negative sign in the nation’s balance of payments Thus, the export of goods and services, unilateral transfers (gifts) received from foreigners, and capital inflows are entered as credits (+) because they involve the receipt of 7:50 A.M Page 398 Salvatore c13.tex V2 - 11/15/2012 13.2 Balance-of-Payments Accounting Principles payments from foreigners On the other hand, the import of goods and services, unilateral transfers or gifts made to foreigners, and capital outflows involve payments to foreigners and are entered as debits (–) in the nation’s balance of payments Financial inflows can take either of two forms: an increase in foreign assets in the nation or a reduction in the nation’s assets abroad For example, when a U.K resident purchases a U.S stock, foreign assets in the United States increase This is a capital inflow to the United States and is recorded as a credit in the U.S balance of payments because it involves the receipt of a payment from a foreigner A capital inflow can also take the form of a reduction in the nation’s assets abroad For example, when a U.S resident sells a foreign stock, U.S assets abroad decrease This is a capital inflow to the United States (reversing the capital outflow that occurred when the U.S resident purchased the foreign stock) and is recorded as a credit in the U.S balance of payments because it too involves the receipt of a payment from foreigners The definition of capital inflows to the United States as increases in foreign assets in the United States or reductions in U.S assets abroad can be confusing and is somewhat unfortunate, but this is the terminology actually used in all U.S government publications Confusion can be avoided by remembering that when a foreigner purchases a U.S asset (an increase in foreign assets in the United States), this involves the receipt of a payment from foreigners Therefore, it is a capital inflow, or credit Similarly, when a U.S resident sells a foreign asset (a reduction in U.S assets abroad), this also involves a payment from foreigners; therefore, it too represents a capital inflow to the United States and a credit Both an increase in foreign assets in the United States and a reduction in U.S assets abroad are capital inflows, or credits, because they both involve the receipt of payment from foreigners On the other hand, financial outflows can take the form of either an increase in the nation’s assets abroad or a reduction in foreign assets in the nation because both involve a payment to foreigners For example, the purchase of a U.K treasury bill by a U.S resident increases U.S assets abroad and is a debit because it involves a payment to foreigners Similarly, the sale of its U.S subsidiary by a German firm reduces foreign assets in the United States and is also a debit because it involves a payment to foreigners (The student should study these definitions and examples carefully, since mastery of these important concepts is crucial to understanding what follows.) To summarize, the export of goods and services, the receipt of unilateral transfers, and financial inflows are credits (+) because they all involve the receipt of payments from foreigners On the other hand, the import of goods and services, unilateral transfers to foreigners, and financial outflows are debits (–) because they involve payments to foreigners 13.2B Double-Entry Bookkeeping In recording a nation’s international transactions, the accounting procedure known as double-entry bookkeeping is used This means that each international transaction is recorded twice, once as a credit and once as a debit of an equal amount The reason for this is that in general every transaction has two sides We sell something and we receive payment for it We buy something and we have to pay for it For example, suppose that a U.S firm exports $500 of goods to be paid for in three months The United States first credits goods exports for $500 since this goods export will lead to the receipt of a payment from foreigners The payment itself is then entered as a financial debit because it represents a financial outflow from the United States That is, by 399 7:50 A.M Page 399 Salvatore c13.tex V2 - 11/15/2012 400 Balance of Payments agreeing to wait three months for payment, the U.S exporter is extending credit to, and has acquired a claim on, the foreign importer This is an increase in U.S assets abroad and a debit The entire transaction is entered as follows in the U.S balance of payments: Credit (+) Goods exports Financial outflow Debit (−) $500 $500 As another example of double-entry bookkeeping, suppose that a U.S resident visits London and spends $200 on hotels, meals, and so on The U.S resident is purchasing travel services from foreigners requiring a payment (This is similar to a U.S import.) Thus, the U.S debits travel services for $200 The payment itself is then entered as a credit because it represents an increase in foreign claims on the United States Specifically, we can think of the $200 in British hands as “securities” giving the United Kingdom a claim on U.S goods and services, equivalent to an increase in foreign assets in the United States Therefore, it is a financial inflow to the United States recorded as a credit of $200 The entire transaction is entered as follows in the U.S balance of payments: Credit (+) Travel services purchased from foreigners Financial inflow Debit (−) $200 $200 As a third example, assume that the U.S government gives a U.S bank balance of $100 to the government of a developing nation as part of the U.S aid program The United States debits unilateral transfers for the $100 gift given (payment made) to foreigners The payment itself is the U.S bank balance given to the government of the developing nation This represents an increase in foreign claims on, or foreign assets in, the United States and is recorded as a financial inflow, or credit, in the U.S balance of payments The entire transaction is thus: Credit (+) Unilateral transfers made Financial inflow Debit (−) $100 $100 As a fourth example, suppose that a U.S resident purchases a foreign stock for $400 and pays for it by increasing foreign bank balances in the United States The purchase of the foreign stock increases U.S assets abroad This is a financial outflow from the United States and is recorded as a financial debit of $400 in the U.S balance of payments The increase in foreign bank balances in the United States is an increase in foreign assets in the United States (a financial inflow to the United States) and is entered as a credit in the U.S balance of payments The result would be the same if the U.S resident paid for the foreign stock by reducing bank balances abroad (This would be a reduction in U.S assets abroad, which is also a financial inflow to the United States and a credit.) Note that both sides of this transaction are financial: 7:50 A.M Page 400 Salvatore c13.tex V2 - 11/15/2012 13.3 The International Transactions of the United States Credit (+) Financial outflow (the purchase of the foreign stock by the U.S resident) Financial inflow (the increase in foreign bank balances in the U.S.) Debit (−) $400 $400 Finally, suppose that a foreign investor purchases $300 of U.S treasury bills and pays by drawing down his bank balances in the United States by an equal amount The purchase of the U.S treasury bills increases foreign assets in the United States This is a financial inflow to the United States and is recorded as a credit in the U.S balance of payments The drawing down of U.S bank balances by the foreigner is a reduction in foreign assets in the United States This is a financial outflow from the United States and is recorded as such in the U.S balance of payments: Credit (+) Financial inflow (the purchase of U.S treasury bills by a foreigner) Financial outflow (the reduction in foreign bank balances in the U.S.) Debit (−) $300 $300 If we assume that these five transactions are all the international transactions of the United States during the year, then the U.S balance of payments is as follows: Credit (+) Goods Services Unilateral transfers Financial flows, net Total debits and credits Debit (−) $500 $500 $200 100 200 $500 The net capital debit balance of −$200 is obtained by adding together the seven capital entries (−$500, $200, $100, −$400, $400, $300, −$300) previously examined separately Total debits equal total credits because of double-entry bookkeeping The traditional distinction between short-term capital and long-term financial transactions (i.e., with maturity of more than one year, such as a bond or a stock, as opposed to three-month treasury bills) is usually no longer made because bonds and stocks are liquid (i.e., can be sold and bought almost immediately) 13.3 The International Transactions of the United States Table 13.1 presents a summary of the international transactions of the United States for the year 2011 In the table, credits are entered with positive signs and debits with negative signs In a few instances, the sum of the subtotals differs slightly from the total because of rounding 401 7:50 A.M Page 401 Salvatore c13.tex V2 - 11/15/2012 402 Balance of Payments ■ TABLE 13.1 Summary of U.S International Transactions for 2011 (billions of dollars) Current Account Credits Exports of goods, services, and income Goods Services Income receipts on U.S assets abroad +2, 848 +1, 497 +606 +745 Debits Imports of goods, services, and income Goods Services Income payments on foreign assets in the U.S −3,181 −2,236 −427 −518 Unilateral transfers, net U.S government grants U.S government pensions and other transfers Private remittances and other transfers −133 −47 −9 −77 Capital Account −1 Capital Account transactions, net Financial Account U.S.-owned assets abroad, excluding financial derivatives (increase/financial outflow (−)) U.S official reserve assets U.S government assets, other than official reserve assets U.S private assets Direct investment Foreign securities Nonbank claims Bank claims Foreign-owned assets in the U.S., excluding financial derivatives (increase/financial inflow (+)) Foreign official assets in the U.S Other foreign assets in the U.S Direct investment in the U.S U.S treasury securities U.S securities other than U.S treasury securities U.S currency Nonbank liabilities Bank liabilities Financial derivatives, net -484 +214 +1, 001 +212 +789 +234 +241 +55 +7 −309 −56 +39 −89 Statistical discrepancy Memoranda Balance of goods trade Balance on services Balance on goods and services Balance on income Balance on goods, services, and income Unilateral current transfers, net Balance on current account −16 −104 −364 −419 −147 −12 +179 +227 −738 −560 −333 −133 −466 Source: U.S Department of Commerce, Survey of Current Business (Washington, D.C.: U.S Government Printing Office, July 2012), pp 58–59 7:50 A.M Page 402 Salvatore c13.tex V2 - 11/15/2012 13.3 The International Transactions of the United States 403 Table 13.1 shows that the United States exported $2,848 billion of goods and services (including the income receipts on U.S assets abroad) in 2011 Goods exports of $1,497 billion included automobiles, petroleum products, chemicals, agricultural food products, computers, and electrical generating machinery (see Case Study 13-1) Service exports of $606 billion included travel and transportation services provided to foreigners, as well as fees and royalties received from foreigners U S residents also earned $745 billion in interest and dividends on their foreign investments Note that while a foreign investment or financial outflow from the United States is recorded as a debit under financial transactions (an increase in U.S.-owned assets abroad), the earnings from the services of U.S assets abroad (foreign investments) are recorded here with the export of other services The income receipts on U.S assets abroad are recorded separately from other services because of their importance ■ CASE STUDY 13-1 The Major Goods Exports and Imports of the United States Table 13.2 shows the value of the major goods exported and imported by the United States in 2011 The major U.S exports were automobiles, petroleum products, chemicals, agricultural food products, computers, and electrical generating machinery U.S imports were dominated by petroleum, automobiles, household appliances, apparel and household goods, computers, and medical products From Table 13.2, we see that the United States had an export surplus in chemicals, ■ TABLE 13.2 dollars) agricultural food products, semiconductors, scientific equipment, and oil drilling and construction equipment These are the products in which the United States has a (revealed) comparative advantage The United States had an import surplus (and comparative disadvantage) in petroleum, automobiles, household appliances, apparel and household goods, computers, medical products, electrical generating machinery, telecommunications, and civilian aircraft Major Goods Exports and Imports of the United States in 2011 (billions of Exports Automobiles Petroleum products Chemicals Agricultural food products Computers Electrical generating machinery Semiconductors Medical products Scientific equipment Telecommunications Household appliances Civilian aircraft Oil drilling and construction equipment Value Imports Value $133.1 131.4 123.1 117.4 48.4 48.3 45.0 44.9 42.7 35.9 34.0 33.4 32.9 Petroleum Automobiles Household appliances Apparel and household goods Computers Medical products Agricultural food products Chemicals Electrical generating machinery Telecommunications Semiconductors Scientific equipment Civilian aircraft $462.3 255.2 136.4 125.7 119.7 91.8 84.6 75.4 59.5 48.5 40.4 35.9 35.5 Source: U.S Department of Commerce, Survey of Current Business (Washington, D.C.: U.S Government Printing Office, July 2012), pp 70–71 7:50 A.M Page 403 Salvatore c13.tex V2 - 11/15/2012 404 Balance of Payments On the other hand, the United States imported goods and services (including income payments on foreign assets in the United States) for $3,181 billion in 2011 Goods imports included petroleum, automobiles, household appliances, apparel and household goods, computers, medical products, and many other products for a total of (−)$2,236 billion The $427 billion imports of services included the travel and transportation services purchased by U.S residents from other nations, fees and royalties paid to foreigners, as well as $518 billion in interest and dividends paid on foreign investments in the United States Note that the inflow of foreign capital into the United States is recorded as a credit under financial transactions (an increase of foreign-owned assets in the United States), while the payments made to foreigners for the services of the foreign capital invested in the United States are recorded as a debit with other imported services in the U.S balance of payments The United States made net unilateral transfers to foreigners of (−)$133 billion during 2011 These included net U.S government economic and military grants to foreign nations (−$47 billion), net U.S government pensions and other transfers to foreign nations (−$9 billion), and net private remittances and other transfers (−$77 billion) Private remittances and other transfers refer to the immigrant remittances to relatives “back home” and other private gifts Since more of these private transfers were made to foreigners than were received by U.S residents from abroad, the United States had a net debit entry of (−)$133 billion for private remittances and other transfers Next, Table 13.1 gives the small net debit capital account transactions (capital outflows) of (−)$1 billion for the United States in 2011 This includes, for the most part, debt forgiveness and goods and financial assets that migrants take with them as they enter or leave the country Following this, Table 13.1 shows that the stock of U.S.-owned assets abroad excluding financial derivatives increased (a capital outflow of the United States and a debit) by the net amount of (−)$484 billion during 2011 This resulted from an increase in the stock of U.S official reserve assets of (−)$16 billion, a net increase in the stock of U.S government assets other than official reserve assets of (−)$104 billion, and a net increase of (−)$364 billion in the stock of U.S private assets abroad The latter include a net increase in U.S foreign direct investments abroad of (−)$419 billion, a net increase in U.S holdings of foreign securities of (−)$147 billion, a net increase of (−)$12 billion in U.S nonbank claims on foreigners, and a net decrease in U.S bank claims on foreigners of (+)$214 billion The official reserve assets of the United States include the gold holdings of U.S monetary authorities, Special Drawing Rights, the U.S reserve position in the International Monetary Fund, and the official foreign currency holdings of U.S monetary authorities Special Drawing Rights (SDRs, or “paper gold”) are international reserves created on the books of the International Monetary Fund (IMF) and distributed to member nations according to their importance in international trade The reserve position in the IMF refers to the reserves paid in by the nation upon joining the IMF, which the nation can then borrow automatically and without questions asked in case of need Membership in the IMF allows nations to borrow additional amounts subject to the conditions imposed by the IMF (SDRs and the nation’s reserve position in the IMF are discussed in detail in Chapter 21.) Table 13.1 also shows that the stock of foreign-owned assets in the United States excluding financial derivatives increased (a capital inflow to the United States and a credit) by the net amount of (+)$1,001 billion in 2011 This included a net increase in the stock of foreign official assets in the United States of (+)$212 billion and a net increase in other 7:50 A.M Page 404 776 Subject Index Norway See also EFTA (European Free Trade Association) agricultural subsidies in, 267–268 Big Mac prices in, 468 Environmental Performance Index (EPI) ranking, 179 EU, free trade agreement (FTA) with, 315 inflation targeting in, 633 international competitiveness ranking of, 175 No-trade equilibrium economies of scale and, 161 wages, 146–147 Novateck Microelectronics, NTBs (nontariff trade barriers) See Nontariff trade barriers (NTBs) NYSE (New York Stock Exchange), 436 O Objective indicators, development of, 708 OECD (Organization for Economic Cooperation and Development) agriculture, support for, 267–268 Asian Financial Crisis of 1997, effect of, 337 autonomous increases in governmental expenditures and, 561–562 current account balance and OECD exchange rate, 523 monetary policy, effect of, 592–593 web site, 28, 218, 393, 422, 615, 644, 686, 728 OECD Economic Outlook, 25 Offer curves, 89–91 See also Formal derivation of offer curves defined of, 89 derivation of, 89–91 Meade, James, theory of, 99–107 origin of, 89 shape of, 89–91 terms of trade and, 94 trade indifference curves and, 100–102 Official reserve account, 406 Official settlements balance, 406 Offshore deposits, 451–452 Offshoring, 161 Oil See Petroleum Oligopolies, 161 multinational corporations (MNCs) as, 379 Oman in Gulf Cooperation Council, 315 U.S., free trade agreement (FTA) with, 314 Omnibus Trade and Competitiveness Act of 1988, 281–282 One price, law of See Law of one price OPEC (Organization of Petroleum Exporting Countries), 263–264 late twentieth century, disarray in, 345–346 Open economies, 12–13 See also Macroeconomics; Small open economy aggregate demand in, 623–626 economic shocks affecting aggregate demand in, 626–629 flexible prices, effect of fiscal/monetary policies in open economies with, 630–634 macroeconomic policies affecting aggregate demand in, 626–629 monetary policies and aggregate demand in, 629 trilemma of policies with, 654–655 Opportunity costs See also Increasing costs; Marginal rate of transformation (MRT) comparative advantage and, 41–45 constant costs, 43–44 defined, 42 in portfolio balance model, 481 production possibility frontier, 42–43 and relative commodity prices, 44–45 Optimum currency areas, 655–657 Optimum tariffs, 239–241, 272 illustration of, 240–241 measurement of, 252–254 Options See also Foreign exchange options put options, 436 Organization for Economic Cooperation and Development (OECD) See OECD (Organization for Economic Cooperation and Development) Organization of Petroleum Exporting Countries (OPEC) See OPEC (Organization of Petroleum Exporting Countries) Organization of text, 15–16 Organized labor AFL-CIO, 70 on foreign investments, 377 multinational corporations (MNCs) and, 379–380 wage inequalities and, 127–128 Original sin, 712 Outsourcing, 161 to India, intra-industry trade and, 166 job losses and, 70 Overshooting of exchange rate See Foreign exchange rates P Pacific nations See also specific nations direct investments by U.S in, 369 foreign debt burden of, 353–354 multinational corporations (MNCs) of U.S., employment by, 381 trade agreements, 326–327 Pakistan Bangladesh and, 656 Big Mac prices in, 468 manufactures exports in, 351 Panama dollarization and, 666–667 U.S., free trade agreement (FTA) with, 284, 314 Pan-Arab Free Trade Area (PAFTA), 326 Paper gold See Special Drawing Rights (SDRs) Paraguay See Mercosur (Southern Common Market) Partial equilibrium analysis, 223–229 See also Tariffs Subject Index equilibrium-relative price with trade with, 86–88 of export subsidies, 269–270 general equilibrium analysis and, 93–94 of import quotas, 258–259 large countries, tariffs in, 244–246 of trade creation, 302 of transportation costs, 176–177 Pass-throughs, 524–526 for G-7 countries, 525 Pattern of trade, 31 external economies and, 182–185 Pension funds and global investments, Per capita GDP, 208–209 Perfect capital mobility fiscal/monetary policies with, 586–589 IS-LM-BP model with, 591–594 Perfect competition in Heckscher-Ohlin theory, 111 Peril-point provisions, 279–280 Persistent dumping, 264 Peru See also Mercosur (Southern Common Market) in Andean Community, 316 Big Mac prices in, 468 Canada, free trade agreement (FTA) with, 316 EU, free trade agreement (FTA) with, 315 inflation targeting in, 633 U.S., free trade agreement with, 284, 314 Peterson Institute for International Economics web site, 572 Petroleum See also OPEC (Organization of Petroleum Exporting Countries) export to import prices, index of, 88 price increases, impact of, 638 stagflation and petroleum shocks, 636–638 supply and demand and, 87 Philippines in ASEAN (Association of South East Asian Nations), 317 Big Mac prices in, 468 capital deepening and output per worker, 200 efficiency change and output per worker, 200 inflation targeting in, 633 output per worker, growth in, 200 technical progress and output per worker, 200 trade reforms in, 350 Uruguay Round, gains from, 285 Phillips curve, 597 Plaza Agreement, 674, 707 Poland Big Mac prices in, 468 in Central European Free Trade Association (CEFTA), 321 in Council of Mutual Economic Assistance (CMEA or COMECON), 318 current account balance of, 554 European Union (EU) and, 312, 321 free trade association (FTA) agreement, 320 GDP (gross domestic product), growth of, 554 inflation targeting in, 633 inward and outward stock of foreign direct investment (FDI), 374–375 pass-through elasticities for, 525 restructuring economy of, 320 Policy mix, 59–600 internal and external balance and, 594–596 with price changes, 596–597 in real world, 597–600 Pollution, 178 Portfolio balance model, 480–486 adjustments to portfolio, 484–486 empirical tests of, 469–492 extended portfolio balance model, 482–484 formal mathematical model of, 498–500 Portfolio investments, 367 motives for, 371–372 risk element in, 372 Portfolio theory, 372 Portugal See also EFTA (European Free Trade Association); European Union (EU) and currency crisis of 1992–1993, 658 escudo, devaluation of, 658 Euro (Ô), conversion rates for, 662 Eurozone crisis and, 664665 government debts and budget deficits of, 665 Maastricht convergence indicators, 660 Post-Catastrophe Debt Relief (PCDR), 704 Postwar balance of payments in U.S., 407–412 Pound sterling See British pound Poverty in developing nations, 15, 351–352, 717–718 globalization and, 355–356 international monetary system and, 717–718 United Nations Conference on Trade and Development (UNCTAD) on, 717–718 Precautionary Credit Line (PCL), 704 Predatory dumping, 264 Preference similarity hypothesis, 163 Preferential trade arrangements, 301 Pressure-group theory of protectionism, 272–273 Pretrade-relative commodity prices, 72–73 Price adjustment mechanism, 508 Price elasticities See also Current account balance; Marshall-Lerner condition estimates of, 517–518 in G-7 countries, 521 J-curve effect and, 519–524 manufactured goods, estimated price elasticities for, 520 pass-throughs and, 524–526 short-run and long-run price elasticities, 521 Prices See also Factor-price equalization theorem; Inflation; Price elasticities commodities prices, changes in, 342 direct controls and, 575 endogenous growth theory and, 336 extended portfolio balance model and price level (P), 483 fixed exchange rates and price discipline, 652–654 flexible exchange rates, effect of, 512–514 foreign exchange rate and domestic prices, 531–533 long-run aggregate supply (LRAS) curve and, 621–623 777 778 Subject Index Prices (continued ) monopolistic competition and, 169–172 optimum currency areas and, 656–657 petroleum price increases, impact of, 638 policy mix with price changes, 596–597 short-run aggregate supply (SRAS) curve and, 621–623 Price-specie-flow mechanism, 527–528, 689 Primary markets, 455 Principle of effective market classification, 575 policy mix and, 595–596 Principles of Political Economy and Taxation (Ricardo), 36 Private sector G-7 countries, balance in, 574–575 international monetary system and, 712 Producers in equilibrium, 77–78 Producer surplus, 225–226 Product categories, factor intensity of, 122 Product cycle model, 172–173 illustration of, 173–175 Product differentiation, 163–164 Product-growth phase (time AB), 173–175 Production See also Heckscher-Ohlin theory; Specialization general equilibrium of, 104–106 monopolistic competition and, 169–172 tariff, production effect of, 224 taste differences, trade based on, 73 two nations, commodities and factors, theory with, 78–79 Production contract curve, 79–82 Production frontiers, 42–43 developing nations and, 335 different production frontiers, reasons for, 59–60 Edgeworth box diagram and, 79–82 equilibrium in isolation and, 62–64 factor abundance and, 115–118 with increasing costs, 58–60 taste differences, trade based on, 73 technical progress and, 194–195 Production functions, 76–78 Cobb-Douglas production function, 78 Production lag, 518 Productivity of labor, 109 Product-maturity phase (time BC), 173–175 Prohibitive tariffs, 236 Protection cost of tariff, 227 Protectionism, 14 See also Nontariff trade barriers (NTBs); Quotas; Strategic trade and industrial policies; Tariffs Bastiat, Fr´ed´eric and, 41 benefits of, 272–273 capital intensity and, 348 fallacious arguments for, 270–271 infant-industry argument, 271–272 new protectionism, 260–261 pressure-group theory of, 272–273 problem of, 286–287 questionable arguments for, 271 Trade Agreements Act of 1934 and, 278–280 Protrade consumption, 197 Protrade growth, 196–197 Protrade production, 197 Puerto Rico and dollarization, 666 Purchase contracts, 346 Purchasing-power parity (PPP) theory, 463, 464–470 absolute purchasing-power parity (PPP) theory, 464–465, 466 Big Mac Index and, 467–468 empirical tests of, 470 income inequalities and, 359–360 as measure of economic size, 205–206 per capita incomes and, 352 relative purchasing-power parity (PPP) theory, 465–469 Put options, 436 Q Qatar in Gulf Cooperation Council, 315 international competitiveness ranking of, 175 Quantity theory of money, 527–528, 689–690 Quebec, secession threat by, 656 Quotas, 33–34, 257, 258–260 developing nations and, 354 as direct controls, 575 International Monetary Fund (IMF) and, 693 partial equilibrium analysis of, 258–259 sugar imports, effects of U.S quota on, 259 Uruguay Round and, 283, 311 voluntary export quotas, 602 R Random walk model, 489 Rate of effective protection, 229–231 calculation of, 230–231 derivation of formula for, 247–248 generalization of, 231–234 theory of, 231–234 Raw materials See Resources R&D See also Multinational corporations (MNCs) endogenous growth theory and, 336 export performance and, 173 factor endowments of various countries, 116–117 factor intensity of, 122 Leontief paradox and, 134 Real domestic absorption, 558 Real exchange rates, 477–478 Real sector shocks and aggregate demand, 629–630 Real wage rate of labor, 129 in leading industrial countries, 130 Recessions GDP (gross domestic product) and, international economics and, 13–14 in United States, 600, 713 Reciprocal demand, law of, 104 Reciprocal demand curves See Offer curves Recognition lag, 518 Reforms See also Trade reforms of international monetary system, 707–709 Subject Index Regional trade agreements in world, 2012, 325–327 Regions of recent settlement, 333–334 portfolio investments in, 368 Regulation Q, Federal Reserve System, 452 Relative commodity prices, 46–47 opportunity costs and, 44–45 Relative factor-price equalization, 125–126, 142–145 Relative factor prices, 114 Relative purchasing-power parity (PPP) theory, 465–469 and inflation, 469 Renminbi, China, 427 web site information, 462 Replacement lag, 518 Republic of Korea See Korea Research and development See R&D Reserve accounts official reserve account, 406 official settlements balance, 406 Reserve assets of United States, 404 Residents, defined, 398 Resource-oriented industries, transportation costs of, 177 Resources See also Arable land buffer stocks and, 345 direct investments and, 373 Dutch disease, 514 endogenous growth theory and, 336 factor endowments of various countries, 116–117 factor intensity of, 122 in Heckscher-Ohlin theory, 112 international monetary system and scarcity of, 718 multinational corporations (MNCs) and, 378 of regions of recent settlement, 334 transfer problem, 390–391 vent for surplus, trade as, 335 Resource scarcity, 15 Retaliation optimum tariffs and, 239–241, 272 strategic trade and industrial policies, U.S response to, 277–278 Revenue effect of tariff, 224 Ricardian trade model, empirical tests of, 47–50 Rice marketing board of Myanmar, 345 Risks See also Foreign exchange risk foreign exchange risks, 438–440 hedging, 441–442 portfolio theory and diversification of, 372 uncovered interest parity and risk premium (RP), 483 Romania in Council of Mutual Economic Assistance (CMEA or COMECON), 318 European Union (EU) and, 312, 321 inflation targeting in, 633 Roosa bonds, 699 Royal Dutch Shell, 444 Rubber and International Natural Rubber Agreement, 345 Rules of the game of the gold standard, 528, 689 Russia See also G-20 countries antidumping investigations by, 266 capital-labor ratio of, 117, 196 currency crisis in, 709–711 current account balance of, 554 factor abundance of, 116–117 factor intensity of trade, 122–123 foreign debt burden of, 353–354 GDP (gross domestic product), growth of, 554 GNI (gross national income) in, 205–206 growth in trade in, 205–206 International Monetary Fund (IMF) balance-of-payments summary for, 420 inward and outward stock of foreign direct investment (FDI), 374–375 nonagricultural products, tariffs on, 223 purchase power parity (PPP) in, 205–206 restructuring economy of, 320 Rybczynski theorem, 190, 192–193 factor growth, effect of, 214–216 formal proof of, 212–217 S Safeguards in Uruguay Round provisions, 283 Safety regulations, 262–263 Samsung, as multinational corporation (MNC), 380 Saudi Arabia See also G-20 countries Big Mac prices in, 468 in Gulf Cooperation Council, 315 transfer problem with, 391 Saving function, 544 Scientific tariffs, 271 Second best, theory of the, 12, 306–307 Securities and Exchange Commission (SEC), 712 Seigniorage benefits, 425, 699 Sematech, 277 web site, 299 Senegal in West African Economic and Monetary Union (WAEMU), 316 September 11, 2001 attacks See 9/11 attacks Serbia European Union (EU), negotiations with, 321 inflation targeting in, 633 Services major goods exports and imports of U.S., 403 Uruguay Round provisions, 283 Shocks, 636–639 aggregate demand and, 626629 Euro (Ô) and, 663 exible exchange rates and, 654 supply shocks, macroeconomic policies and, 635–639 Short position in currency, 443 Short-run aggregate supply (SRAS) curve, 620–621 equilibrium in, 621–623 Short-run income distribution, 146–148 Short-run outputs in United States, 623 779 780 Subject Index Showaka Shell Sekiyu case, 444 Siemens, 380 Simplo Technology, Singapore in ASEAN (Association of South East Asian Nations), 317 Big Mac prices in, 468 current account balance of, 554 GDP (gross domestic product), growth of, 554 as high-performance Asian economy (HPAE), 337 international competitiveness ranking of, 175 inward and outward stock of foreign direct investment (FDI), 374–375 as trade partner of U.S., 409 Uruguay Round, gains from, 285 U.S., free trade agreement (FTA) with, 284, 314 Single European Act, 312 Single factoral terms of trade, 338–339 Skilled labor See also Highly skilled labor Heckscher-Ohlin theory with, 135 Sliding or gliding parities, 670 Slovak Republic in Central European Free Trade Association (CEFTA), 321 European Union (EU) and, 312, 321 restructuring economy of, 320 Slovenia European Union (EU) and, 312, 321 Exchange Rate Mechanism II (ERM II) and, 662 restructuring economy of, 320 Small countries, 47 general equilibrium analysis of tariffs in, 234–237 with increasing costs, 69 tariffs, general equilibrium analysis of, 234–237 Small-country case of growth and trade, 196–201 illustration of, 197–199 technical progress and, 199–201 Small open economy equilibrium national income of, 548–551 graphical determination of equilibrium national income, 549–551 import function of, 546–547 multiplier for foreign trade, 551–555 Smithsonian Agreement, 700 Smoot-Hawley Tariff Act, 278, 556–557, 691 Social indifference curves See Community indifference curves South Africa See also G-20 countries antidumping investigations by, 266 Big Mac prices in, 468 current account balance of, 554 Environmental Performance Index (EPI) ranking, 179 EU, free trade agreement (FTA) with, 315 GDP (gross domestic product), growth of, 554 GNI (gross national income) in, 205–206 growth in trade in, 205–206 inflation targeting in, 633 inward and outward stock of foreign direct investment (FDI), 374–375 manufactures exports in, 351 purchase power parity (PPP) in, 205–206 in South Africa Development Community (SADC), 316 South Africa Development Community (SADC), 316 South America See Latin America South Asia population, economic and health indicators in, 351–352 South Asian Preferential Trade Agreement (SAPTA), 327 South Asian Preferential Trade Agreement (SAPTA), 327 Southern African Development Agreement (SADC), 326 Southern Common Market (Mercosur) See Mercosur (Southern Common Market) Southern Europe, inward and outward stock of foreign direct investment (FDI) in, 374–375 South Korea See Korea South Pacific Regional Trade and Economic Cooperation (SPARTECA), 327 Sovereign Debt Restructuring Mechanism (SDRM), 712 Soviet Union See also Former Soviet Republics Council of Mutual Economic Assistance (CMEA or COMECON), 318–321 formal dissolution of, 320–321 International Monetary Fund (IMF) and, 692 variety gains with international trade and, 165 Spain See also European Union (EU) capital deepening and output per worker, 200 capital-labor ratio of, 117, 196 central bank independence and inflation, 632 and currency crisis of 1992–1993, 658 efficiency change and output per worker, 200 Euro (Ô), conversion rates for, 662 Eurozone crisis and, 664–665 government debts and budget deficits of, 665 International Monetary Fund (IMF) balance-of-payments summary for, 420 intra-industry trade, growth of, 167 inward and outward stock of foreign direct investment (FDI), 374–375 labor migration in, 386 Maastricht convergence indicators, 660 output per worker, growth in, 200 pass-through elasticities for, 525 peseta, devaluation of, 658 technical progress and output per worker, 200 traditional and purchasing-power parity (PPP) per capita incomes in, 359 Special Data Dissemination Standards (SDDS), 712 Special Drawing Rights (SDRs), 404, 694, 696 from 1950–1973, 701 substitution account, 707 in 2011, 703 Specialization dynamic external economies and, 184–185 Subject Index external economies and, 183–184 gains from trade and, 67–68 in Heckscher-Ohlin theory, 111–112 increasing costs, 67 Specific-factors model, 128–129, 146–148 Specific tariffs, 222 Speculation, 442–444 fixed exchange rates and, 650–652 restrictions on, 708–709 against U.S dollar, 700 Speculative bubbles, 491 Speculative demand for money, 580 Sporadic dumping, 264 Spot rates, 434–435 expected change in the spot rate, 482–484 foreign exchange swaps, 435–436 Sri Lanka and Uruguay Round gains, 285 St Kits-Nevis in CARICOM, 316 St Lucia in CARICOM, 316 St Maartin, exchange rate arrangements of, 672 St Vincent in CARICOM, 316 Stability and Growth Pact (SGP), 659 Stabilizing speculation, 443 fixed exchange rates and, 650–652 Stable equilibria, 107 Stable foreign exchange markets, 514–516 synthesis of automatic adjustments and, 560–562 Stage IV (CD) and product cycle model, 174–175 Stage V (past point D) and product cycle model, 174–175 Stagflation and petroleum shocks, 636–638 Stagnation in Japan, 369 Standardization process and product cycle model, 172 Standard of living and international trade, 6–9 Standby arrangements, 695–696 Starvation See Hunger and starvation State trading companies, 318 Statistical Abstract of the United States, 24 Statistical discrepancy, 405 Status quo and protectionism, 273 Steel trigger-price mechanism for, 264–265 voluntary export restraints (VERs) on, 261 STMicroelectronics, Stocks and bonds See also International capital flows; Portfolio investments buffer stocks, 345 direct investments in, 368 Eurobonds, 455 foreign bonds, 455 foreign-owned assets in U.S., stock of, 403–405 in portfolio balance model, 481–482 Roosa bonds, 699 Stolper-Samuelson theorem, 127, 236–237, 239 graphical representation of, 248–250 Metzler paradox and, 239, 250–251 Strategic trade and industrial policies, 274–278 See also Japan with game theory, 275–277 two-firm competition and, 275–277 U.S response to, 277–278 Strike price, 436 Structural imbalances in advanced economies, 715–717 Structural Impediments Initiative (SII), 278 Subprime mortgage crisis, 712 Sub-Saharan Africa foreign debt burden of, 353–354 population, economic and health indicators in, 351–352 poverty in, 355, 717 Subsidies See also Airbus subsidies; Export subsidies capital intensity and, 348 infant-industries and, 261–262 problem of, 287 tariffs compared, 294–295 Uruguay Round provisions, 283 Substitution account, 707 Sugar International Sugar Agreement, 345 U.S quota, effect of, 259 Summary statements, 398 Super gold tranche, 694 Super 301 provision of Omnibus Trade and Competitiveness Act of 1988, 281–282 Supplemental Reserve Facility (SRF), 704 Supply and demand See also Aggregate demand; Aggregate supply; Demand for money; General equilibrium analysis; Money supply derived demand, 114 petroleum, international price of, 87 in regions of recent settlement, 334–335 Supply curve and flexible exchange rates, 511–512 Supply of money, 471–473 Supply shocks, macroeconomic policies and, 635–639 Surinam in CARICOM, 316 Surplus in balance of payments, 406–407 consumer surplus and tariffs, 225–226 vent for surplus, trade as, 335 Survey of Current Business web site, 422 Sustainable development, international monetary system and, 718 Swan diagram, 577–578 Swap arrangements, 696 expansion of, 704 rates and, 435–436 Swaziland in South Africa Development Community (SADC), 316 Sweden See also EFTA (European Free Trade Association); European Union (EU) Big Mac prices in, 468 Environmental Performance Index (EPI) ranking, 179 Exchange Rate Mechanism II (ERM II) and, 662 inflation targeting in, 633 international competitiveness ranking of, 175 intra-industry trade, growth of, 167 Maastricht convergence indicators, 660 pass-through elasticities for, 525 781 782 Subject Index Swiss franc relative international importance of, 426 U.S dollar and, 491 Swiss National Bank, 633 Switzerland See also EFTA (European Free Trade Association); Swiss franc agricultural subsidies in, 267–268 Big Mac prices in, 468 central bank independence and inflation, 632 Environmental Performance Index (EPI) ranking, 179 EU, free trade agreement (FTA) with, 315 exchange controls by, 601 international competitiveness ranking of, 175 intra-industry trade, growth of, 167 inward and outward stock of foreign direct investment (FDI), 374–375 Japan, free trade agreement (FTA) with, 316 labor migration in, 386 pass-through elasticities for, 525 Syndicates, 455 Synthesis of automatic adjustments, 560–562 Systematic Transformation Facility (STF), 704 T Taiwan Big Mac prices in, 468 current account balance of, 554 GDP (gross domestic product), growth of, 554 international competitiveness ranking of, 175 as trade partner of U.S., 409 U.S companies, manufacturing for, variety gains with international trade and, 165 Tanzania in East African Community (EAC), 316 in South Africa Development Community (SADC), 316 Target zones, 707–708 Tariff factories, 308 Tariffs, 33–34, 221–256 See also Ad valorem tariffs; GATT (General Agreement on Tariffs and Trade); Import tariffs; Optimum tariffs; Rate of effective protection as bargaining tariffs, 272 cascading tariff structure, 232–233 compound tariffs, 222 consumer surplus, effect on, 225–226 costs and benefits of, 226–229 customs unions, 302 as direct controls, 575 direct foreign investments and, 373 dutiable imports, U.S average rates on, 282 export tariffs, 221 Great Depression and, 691 in Heckscher-Ohlin theory, 111–112 intra-industry trade and, 164 large countries general equilibrium analysis of tariffs in, 237–239 partial equilibrium analysis of tariffs in, 244–246 Leontief paradox and, 133 Metzler paradox, 239, 250–251 nominal tariffs, 229 on nonagricultural products in advanced countries, 222 problem of, 287 short-run effect of, 251–252 subsidies compared, 294–295 Trade Expansion Act of 1962 and, 280 Uruguay Round and, 311 welfare effect of removing, 227–228 Tastes See also Heckscher-Ohlin theory factor abundance and, 114 Heckscher-Ohlin theory and, 121–122 Leontief paradox and, 133 trade based on differences in, 72–73 two nations, taste changes and trade in, 208 Taxes border taxes, 263 foreign investments and, 377–378 Foreign Sales Corporations (FSC) provisions of U.S tax code, 267 multinational corporations (MNCs) and, 379, 382 value-added tax (VAT), 263, 312 Taylor monetary rule, 492 Technical progress See also Neutral technical progress capital-saving technical progress, 194 defined, 193 endogenous growth theory and, 336 graphical analysis of, 216–217 labor-saving technical progress, 194 neutral technical progress, 199–200 output per worker and, 200 production frontiers and, 194–195 regions of recent development and, 334 in small-country case of growth and trade, 199–201 trade based on, 172–175 Technical regulations, 262–263 Technological gap model, 172–173 Technology See also Technical progress job losses and, 70 multinational corporations (MNCs) and export of, 380–381 wage inequalities and, 127–128 Terms of trade, 201 See also Commodity terms of trade of advanced countries, 96 definition of, 94 depreciation affecting, 513 of developing countries, 96 economic development and, 338–342 evaluation affecting, 513 flexible exchange rates, effect of, 512–514 of G-7 countries, 95 illustration of, 95 leading industrial countries, changes in, 208–209 measurement of, 94 offer curves and, 94 statistical difficulties in estimating, 342 types of, 338–339 Subject Index Terrorism See also 9/11 attacks GDP (gross domestic product) and, Thailand See also G-20 countries in ASEAN (Association of South East Asian Nations), 317 Big Mac prices in, 468 capital deepening and output per worker, 200 capital-labor ratio of, 117, 196 currency depreciation in, 513 current account balance of, 554 economic crisis of 1997, 337 efficiency change and output per worker, 200 foreign debt burden of, 353–354 GDP (gross domestic product), growth of, 554 as high-performance Asian economy (HPAE), 337 inflation in, 513, 633 manufactures exports in, 351 output per worker, growth in, 200 technical progress and output per worker, 200 Theory of tariff structure, 229–234 Theory of the second best, 12, 306–307 Thermal pollution, 178 Three-point arbitrage, 431–432 Tight monetary policy, 574 full-employment level and, 581–582 petroleum prices and, 638 policy mix and, 594 Tin and International Tin Agreement, 345 Togo in West African Economic and Monetary Union (WAEMU), 316 Tokyo Round, 263, 281, 286, 311 Toshiba, Toyota, 380 Trade See International trade Trade Adjustment Assistance (TAA), 280 Trade Adjustment Reform Act of 2002, 280 Trade Agreements Act of 1934, 278–279 Trade and Tariff Act of 1984, 281–282 Trade approach, 507 Trade barriers, See also Nontariff trade barriers (NTBs); Protectionism; Quotas; Tariffs customs unions, 302 as direct controls, 575 direct foreign investments and, 373 free trade areas, 301–302 Great Depression and, 691 International Monetary Fund (IMF) and, 692–693 international monetary system and, 715 Lom´e Convention and, 311 preferential trade arrangements, 301 Trade controls, 600, 601 Trade-creating customs unions, 302–304 conditions leading to increased welfare and, 307 illustration of, 303–304 Trade creation, 302–304 Trade deficits See Deficits Trade deflection, 313 Trade diversion, 304 Trade-diverting customs unions, 304–306 illustration of, 304–306 static welfare effects, 307–308 general equilibrium analysis of, 324–325 Trade Expansion Act of 1962, 280, 695 Trade indifference curves, 100–102 Heckscher-Ohlin theory and, 120–121 optimum tariff and, 252–253 Trade liberalization complete trade liberalization, benefits of, 273–274 developing nations and, 349–351 welfare effects of, 228–229 Trade or commercial policies, 221 Trade possibilities line/trade line, 66 Trade promotion authority of president, 284–285 Trade protectionism See Protectionism Trade Reform Act of 1974, 280–281 Trade reforms in developing countries, 350 Trade Reform Act of 1974, 280–281 Trade-related investment measures (TRIMs) problems with, 287 of Uruguay Round, 284 Trading blocs optimum currency areas or blocs, 656–657 problem of, 287 Transaction costs, 450–451 Transaction demand for money, 580 Transaction exposure, 440 hedging, 441–442 Transfer pricing, 379 problems with, 381–382 Transfer problem, 390–391, 559 Transition economies See Developing nations Translation exposure, 440 Trans-Pacific Strategic Economic Partnership (TPP), 327 Transparency and international monetary system, 712 Transportation costs, 175–177 general equilibrium analysis of, 176 in Heckscher-Ohlin theory, 111–112 industry location and, 177–178 partial equilibrium analysis of, 176–177 Transport or logistics costs, 176 Treaty of Rome, 309 Single European Act amending, 312 Triangular arbitrage, 431–432 Trigger-price mechanism, 264–266 Trilemma of policies with open economies, 654–655 Trinidad and Tobago in CARICOM, 316 Tunisia free trade agreement (FTA) with EU, 315 manufactures exports in, 351 Turkey See also G-20 countries agricultural subsidies in, 267–268 antidumping investigations by, 266 Big Mac prices in, 468 capital deepening and output per worker, 200 capital-labor ratio of, 117, 196 currency crisis in, 709–711 current account balance of, 554 EU, free trade agreement (FTA) with, 315 783 784 Subject Index Turkey (continued ) European Union (EU) and, 312, 321 foreign debt burden of, 353–354 GDP (gross domestic product), growth of, 554 inflation targeting in, 633 output per worker, growth in, 200 technical progress and output per worker, 200 trade reforms in, 350 Uruguay Round, gains from, 285 Turkmenistan, Environmental Performance Index (EPI) ranking for, 179 Twin deficits, 585–586 Two-point arbitrage, 431–432 Two-tier gold market See Special Drawing Rights (SDRs) U Uganda in East African Community (EAC), 316 Uncertainty, fixed exchange rates avoiding, 649–650 Uncovered interest arbitrage, 444–446 monetary approach to the balance of payments and, 479–480 Uncovered interest rate parity, 445–446, 479 extended portfolio model and, 482–483 Unemployment external balance and unemployment, fiscal/monetary policies from, 581–582 external deficit and unemployment, fiscal/monetary policies from, 583–584 inflation and, 639, 648 international economics and, 13–14 international monetary system and, 714 Phillips curve and, 597 protectionism and, 271 United Nations Conference on Trade and Development (UNCTAD) on, 717–718 Unilateral transfers, 400 from United States, 404 Unions See Organized labor United Arab Emirates in Gulf Cooperation Council, 315 international competitiveness ranking of, 175 United Kingdom See also British pound; EFTA (European Free Trade Association); European Union (EU); G-7 countries; G-20 countries absolute advantage and, 35–36 bank rate, raising, 690 Big Mac prices in, 467 brain drain in, 385–386 British Commonwealth Preference Scheme, 301 capital deepening and output per worker, 200 capital-labor ratio of, 117, 196 central bank independence and inflation, 632 and currency crisis of 1992–1993, 658 current account balance in, 524 Dutch disease, 514 effective exchange rates in, 524 efficiency change and output per worker, 200 Exchange Rate Mechanism (ERM), abandonment of, 658 Exchange Rate Mechanism II (ERM II) and, 662 export volume in, 208–209 factor abundance of, 116–117 GDP (gross domestic product) growth in, 208–209 gold standard and, 526–527, 690–691 income elasticity of imports, 547 inflation rate in, 476, 633 international competitiveness ranking of, 175 international macroeconomic policy coordination and, 674 International Monetary Fund (IMF) balance-of-payments summary for, 419 intra-industry trade, growth of, 167 inward and outward stock of foreign direct investment (FDI), 374–375 labor migration in, 386 Maastricht convergence indicators, 660 monetary growth in, 476 multinational corporations (MNCs) of U.S., employment by, 381 in nineteenth century, 333–334 output per worker, growth in, 200 pass-through elasticities for, 525 per capita GDP changes in, 208–209 price elasticities for imports and exports, 521 private sector balances of, 549 real hourly wage in manufacturing in, 130 technical progress and output per worker, 200 terms of trade in, 208–209, 340–341 trade imbalances in, 716 as trade partner of U.S., 409 traditional and purchasing-power parity (PPP) per capita incomes in, 359 United Nations Climate Change Conference, Bali, 2007, 178 Climate Change Conference, South Africa 2011, 179 International Trade Statistics Yearbook web site, 155 New International Economic Order (NIEO), 354–355 web site, 28, 84, 218 United Nations Conference on Trade and Development (UNCTAD), 355 on poverty, 717–718 web site, 365 United Nations Development Programs (UNDPs) Human Development Report, 365 United States See also Balance of payments; G-7 countries; G-20 countries; NAFTA (North American Free Trade Agreement); United States dollar absolute advantage and, 35–36 agricultural subsidies in, 267–268 antidumping investigations by, 266 Asian Financial Crisis of 1997, effect of, 557 autonomous increases in governmental expenditures and, 561–562 balance-of-payments deficits, 698–699 Big Mac prices in, 467 Subject Index brain drain in, 385–386 budget deficits and current account, relationship between, 585–586 capital deepening and output per worker, 200 capital-labor ratio of, 117, 196 capital outflows for, 404 central bank independence and inflation, 632 commercial policy, history of, 278–282 comparative advantage of, 64 competitiveness of, 175 currency crisis in, 712 current account balance budget deficits and, 585–586 depreciation and, 523 effective exchange rate and, 521–522 growth of, 553 debt balance of, 405–406 as debtor nation, 414 deficits, 406–407, 585–586, 698–699 deindustrialization in, 71 economic effect of import tariffs in, 228 efficiency change and output per worker, 200 Euro (Ô), demand for, 429 European Union (EU), exports to, 34 exchange controls by, 601 export to import prices, index of, 88 export volume in, 208–209 factor abundance of, 116–117 factor intensity of trade, 122–123 financial account of, 406 fiscal policy, effect of, 588–589, 599 foreign-owned assets, stock of, 403–405 free trade agreement with Israel, 313 GDP (gross domestic product), growth of, 208–209, 553 globalization and job loss rates, 162 GNI (gross national income) in, 205–206 immigration debate and policy in, 386–387 income elasticity of imports, 547 index of export to import prices for, 88 industrial products, tariffs on, 232–233 inflation rate, 476 and unemployment rates in, 639 international banking facilities (IBFs) in, 454 international competitiveness ranking of, 175 international investment position of, 412–414 international macroeconomic policy coordination and, 674 International Monetary Fund (IMF) balance-of-payments summary for, 419 international transactions of, 401–405 intra-industry trade and, 163–164, 167 Israel, free trade agreements (FTAs) of, 314 labor migration in, 386–387 macroeconomic data in last decade, 599 major goods exports and imports of, 403 monetary growth in, 476 monetary policy, effect of, 592–593, 599 net debit balance of, 406 nonagricultural products, tariffs on, 222 output per worker, growth in, 200 pass-through elasticities for, 525 per capita GDP changes in, 208–209 pervasiveness of nontariff trade barriers (NTBs) in, 268–269 petroleum shocks and stagflation in, 637 postwar balance of payments in, 407–412 price elasticities for imports and exports, 521 private sector balances of, 549 purchase power parity (PPP) in, 205–206 real hourly wage in manufacturing in, 130 recessions in, 600, 713 reserve assets of, 404 seigniorage privilege, 699 short-run outputs in, 623 sources of international data and information published by, 24 strategic trade and industrial policies by other countries, response to, 277–278 subprime mortgage crisis, 712 sugar imports, effects of U.S quota on, 259 surplus in balance of payments, 406–407 tariffs, economic effects of, 228 technical progress and output per worker, 200 terms of trade changes in, 208–209 trade deficit with Japan, 410 trade imbalances in, 716 trade partners of, 409 traditional and purchasing-power parity (PPP) per capita incomes in, 359 Treasury and gold standard, 527 unilateral transfers from, 404 Uruguay Round, gains from, 285 variety gains with international trade and, 165 voluntary export restraints (VERs) on Japanese automobiles to U.S., 261–262 wage inequalities, international trade and, 127–128 web site, 686 United States Census Bureau on immigration, 387 web site, 28, 187 United States Citizenship and Immigration Service web site, 393 United States Department of Commerce International Trade Administration web site, 155, 187 United States dollar See also Foreign exchange markets; Foreign exchange rates; Gold standard actual and PPP exchange rate of, 466 balance of payments and, 432–434 carry trade and, 445–446 dollar glut, 701 dollar overhang, 707 dollar shortage, 698 dollar standard, 700 as dominant international currency, 425–426 effective exchange rate of, 439–440, 521–522 forecasting exchange rate for, 490–492 foreign exchange risks and, 438–439 German mark and, 477–478 interest rate differentials and exchange rate index for, 480 Japanese yen and, 490–492, 603 785 786 Subject Index United States dollar (continued ) pass-through of depreciation, 525 as vehicle currency, 425 United States Immigration and Naturalization Service, 387 United States International Trade Commission web site, 299 United States State Department web site, 29 United States Tariff Commission, 279–280 United States Trade Representative web site, 299 United States Virgin Islands and dollarization, 666 University of Pennsylvania web site, 155, 218 Unskilled labor, factor intensity of, 122 Unstable equilibria, 107 Unstable foreign exchange markets, 514–516 Unsustainable development, 15 Uruguay See Mercosur (Southern Common Market) Uruguay Round, 232, 257, 281, 282–286 developing nations, problems faced by, 718 export pessimism, prevention of, 354 gains from, 285 multinational corporations (MNCs) and, 383 trade liberalization and, 349–350 Uzbekistan, Environmental Performance Index (EPI) ranking for, 179 V Value-added tax (VAT), 263, 312 Variable import levies, 311 Variety gains and international trade, 165 Vehicle currency, 425 World Bank on, 427 Venezuela See also Mercosur (Southern Common Market) in Andean Community, 316 Vent for surplus, trade as, 335 Vertical integration, 373 multinational corporations (MNCs) and, 378 Vietnam in ASEAN (Association of South East Asian Nations), 317 in Council of Mutual Economic Assistance (CMEA or COMECON), 318 Volkswagen, 380 Voluntary export quotas, 602 Voluntary export restraints (VERs), 261–262 on Japanese automobiles, 262 W Wages See also Factor-price equalization theorem; Real wage rate of labor comparative advantage and, 39–40 convergence of real wages in industrial countries, 130 direct controls as wage controls, 575 hourly compensation of U.S workers in manufacturing web site, 155 inequalities, international trade and, 127–128 international labor migration and, 384 minimum wage, 127–128 multinational corporations (MNCs) and low-wage nations, 379 no-trade equilibrium wage, 146–147 protectionism, fallacious arguments for, 270–271 specific-factors model and, 128–129 Wall Street Journal, 25 War See also World War I; World War II damages reparations and transfer problem, 391 Sub-Saharan Africa and, 355 Wastes, 178 Water pollution, 178 Wealth, 201 extended portfolio balance model and, 483 immiserizing growth and, 202–203 The Wealth of Nations (Smith), 32 Web sites antiglobalization discussion, 299 on ASEAN (Association of South East Asian Nations), 330 Asian Development Bank, 572 on Asia-Pacific Economic Cooperation (APEC), 330 Bank for International Settlements (BIS), 503, 615, 644, 686, 728 Bank of Canada, 686 Bank of Japan, 686 Board of Governors of the Federal Reserve, 28 Bureau of Economic Analysis, 28, 539, 572, 615, 644 Bureau of Economics Analysis, 422 Canadian Department of Foreign Affairs, 299 carry trade information, 462 citizen.org/trade, 84 Council of Foreign Relations, 539, 572 for dumping discussions, 299 The Economic Report of the President, 28, 299, 686 Energy Information Administration, 108 European Central Bank (ECB), 686 European Commission (EC), 686 European Monetary Union (EMU), 572 European Union (EU), 299, 330, 686 EuroStat (the Statistical Office of European Communities), 155 Export-Import Bank, 299 for fast track discussions, 299 Federal Reserve Bank of New York, 686 Federal Reserve Bank of St Louis, 462, 503, 539, 572, 615, 644, 686 Federal Reserve Board, 644 foreign exchange market information, 462 foreign exchange rate information, 462 on Former Soviet Republic, 330 on Free Trade Area of the Americas (FTAA), 330 for gravity model, 28 hourly compensation of U.S workers in manufacturing, 155 Institute for International Economics (IIE), 28, 539, 686 Inter-American Development Bank, 572 Subject Index for international environmental law, 299 International Investment Statistics Yearbook, 393 International Monetary Fund (IMF), 28, 84, 108, 155, 218, 365, 686, 728 International Trade Administration, 84, 155, 187 International Trade Statistics Yearbook, 155 Japan, trade data for, 572 on Mercosur (Southern Common Market), 330 MIT, 503 on NAFTA (North American Free Trade Agreement), 330 National Bureau of Economic Research (NBER), 218, 615, 644, 686 National Science Foundation, 299 OECD (Organization for Economic Cooperation and Development), 28, 218, 393, 422, 615, 644, 686, 728 Peterson Institute for International Economics, 572 on R&D science, 299 renminbi information, 462 Sematech, 299 Statistics Center of the Management and Coordination Agency for Japan, 299 Survey of Current Business, 422 United Nations, 28, 84, 218 United Nations Conference on Trade and Development (UNCTAD), 365 United Nations Development Programs (UNDPs), 365 United States, 686 University of Pennsylvania, 155, 218 U.S Census Bureau, 28, 187 U.S Citizenship and Immigration Service (INS), 393 U.S International Trade Commission, 299 U.S State Department, 299 U.S Trade Representative, 299 World Bank, 28, 84, 365, 728 World Economic Outlook, 422 World Investment Report, 393, 422 World Trade Organization (WTO), 28, 56, 84, 218, 299, 728 Welfare effects European Union (EU), liberalizing tariffs in, 228–229 of international capital flows, 374–378 of international labor migration, 384–386 United States, liberalizing tariffs in, 227–228 West African Economic and Monetary Union (WAEMU), 316, 326 Wheat and International Wheat Agreement, 346 Wholesale market, 424 Wintek, World Bank, 693 foreign debt crisis and, 353 Korea, web site for, 299 Millennium Development Goals (MDGs), 355–356 on poverty, 355 resident status of, 398 trade liberalization and, 349–350 of vehicle currencies, 427 web site, 28, 56, 84, 218, 299, 728 World Development Report 2012, 365 World Development Reports, 25 World Economic Outlook, 25, 365 web site, 422 World Investment Report web site, 393, 422 World trade See International trade World Trade Organization (WTO) and Doha Round, 288 on Foreign Sales Corporations (FSC) provisions of U.S tax code, 267 GATT (General Agreement on Tariffs and Trade), replacement of, 284 Millennium Round attempt, 287 steel, antidumping duties on, 265 trade rounds sponsored by, 286 Uruguay Round and, 284 web site, 28, 56, 84, 218, 299, 728 World War I commodity terms of trade and, 341 globalization and, gold standard and, 690–691 macroeconomic performance after, 697 reparations and transfer problem, 391 World War II balance of payments in U.S after, 407–412 commodity terms of trade and, 341 globalization and, gold standard and, 690–691 Leontief paradox and, 133 macroeconomic performance AND, 697 WTO (World Trade Organization) See World Trade Organization (WTO) Y Yemen, Environmental Performance Index (EPI) ranking for, 179 Yen See Japanese yen Yuan currency, China, 427 Yugoslavia, 320 YY curve, 576–578 Z Zambia in South Africa Development Community (SADC), 316 Zimbabwe in South Africa Development Community (SADC), 316 Zollverein, 302 787 Fiji Low ($1,005 or less) The world by income Tonga American Samoa (US) No Data High ($12,276 or more) Upper middle ($3,976–$12,275) Lower middle ($1,006–$3,975) Samoa Kiribati French Polynesia (Fr) Aruba (Neth) Puerto Rico (US) CaymanIs.(UK) Cuba St Vincent and the Grenadines Barbados Trinidad and Tobago Grenada St Lucia Martinique (Fr) Dominica Guadeloupe (Fr) Antigua and Barbuda Argentina Bolivia Brazil French Guiana (Fr) Guyana Suriname Uruguay Paraguay Bermuda (UK) R.B de Venezuela Chile Colombia Haiti The Bahamas Peru Ecuador Costa Rica Panama Belize Jamaica Guatemala Honduras El Salvador Nicaragua St Kitts and Nevis R.B de Venezuela Netherlands Antilles (Neth) U.S Virgin Islands (US) Dominican Republic Mexico United States Canada Greenland (Den) Ireland Isle of Man (UK) Guinea Benin nd Polan Hungary Gabon Ukraine Moldova Romania Kenya South Africa Antarctica Lesotho Madagascar Mayotte (Fr) Mozambique Malawi Swaziland Zimbabwe Zambia Namibia Botswana Angola Seychelles Somalia Comoros Ethiopia Djibouti Eritrea Rep of Yemen Rwanda Dem.Rep.of Burundi Congo Tanzania Uganda Sudan Bulgaria Central African Republic Chad Congo Cameroon Nigeria Nigar Slovenia Romania Croatia Bosnia and Herzegovina Seerbia San MonteMarino negro Bulgaria FYR Italy Macedonia Albaniaa Vatican Greece City Austria Finland Kazakhstan Mauritius Reunion (Fr) Bhutan Myanmar China Mongolia Bangladesh Sri Langa Nepal Maldives India Russian Federation Kyrgyz Uzbekistan Georgia AzerRep Armenia Turkmenistan baijan Turkey Tajikistan Greece Syrian Cyprus Islamic Rep Arap Lebanon Malta Afghanistan Tunisia of Iran Rep Iraq Israel Kuwait West Bank and Gaza Jordan Pakistan Bahrain Qatar Arab Rep Libya of Egypt Saudi Arabia United Arab Emirates Oman Czech Republic Ukraine Slovak Reppublic Germany Cote Ghanaa d'lvoire Burkinaa Faso Mali Algeria A Monaco Italy F France T Togo Equatorial Guinea G Sao Tome and Prrincipe Liberia Sierra Leone e Gambia Guinea-Bissan Senegal Mauritania Former Spanish Sahara Sweden Estonia Russian Latvia Denmark Fed Lithuania Germany Poland Belarus Norway Uniteed Kingdoom Belgium Spain Morocco Gibraltar (UK) Portugal Liechtenstein Switzerland Andorra Luxembourg Channel Islands (UK) erde Fearoe Islands (Den) The Netherlands Iceland Singapore Brunei Darussalam Malaysia Vietnam Cambodia Lao P.D.R Thailand Indonesia Philippines Dem.People's Rep of Korea Rep of Korea Australia Timor-Leste Palau Solomon Islands Nauru New Caledonia (Fr) Vanuatu New Zealand Papua New Guinea Federated States of Micronesia Guam (US) N Mariana Islands (US) Japan Fiji Tuvalu Kiribati Marshall Islands 560 1,088 45,194 40,080 55.668 698 154,234 137,672 21,097 15,084 21,283 369,854 1,000 4,848 3,929 152,995 16,455 850 64 4,200 3,000 316,713 120 2,800 53,735 1,201,534 g 329,422 32,853 3,100 5,600 8,788 8,900 10,474 113,437 93,344 5,463 13,799 23,062 3,797 15 1,596 62,798 484,725 1,135 126,383 5,500 20,093 7,214 1,010 567 5,196 83,778 162,613 119,481 78,113 39,500 114,587 47,935 405,777 580,719 6,366 43,196 4,421 363,534 1,439 940 4,187 150 35,600 16,452 1,140 920 157,433 2,100 1,370 229,637 Source: The World Bank, 2012 Afghanistan Albania Algeria Angola Argentina Armenia Australia Austria Azerbaijan Bangladesh Belarus Belgium Benin Bolivia Bosnia and Herzegovina Brazil Bulgaria Burkina Faso Burundi Cambodia Cameroon Canada Central African Republic Chad Chile China Hong Kong SAR, China Colombia Congo, Dem Rep Congo, Rep Costa Rica Côte d'lvoire Croatia Czech Republic Denmark Dominican Republic Ecuador Egypt, Arab Rep El Salvador Eritrea Ethiopia Finland France Georgia Germany Ghana Greece Guatemala Guinea Haiti Honduras Hungary India Indonesia Iran, Islamic Rep Iraq Ireland Israel Italy Japan Jordan Kazakhstan Kenya Korea, Rep Kyrgyz Republic Lao PDR Lebanon Liberia Libya Lithuania Madagascar Malawi Malaysia Mali Mauritania Mexico 3,970 4,548 39,294 17,000 38,780 3,304 165,471 143,382 6,514 21,833 28,563 351,945 2,040 4,410 8,773 133,669 23,330 2,083 402 6,200 4,250 329,904 300 1,950 42,427 1,005,688 352,241 32,898 3,600 2,900 11,395 6,050 21,203 105,179 82,947 12,283 15,093 44,946 7,255 540 7,963 60,753 559,817 4,378 938,295 8,140 59,858 11,531 1,400 2,050 7,788 78,175 249,590 91,749 50,375 37,000 62,507 49,278 412,721 551,960 14,075 28,409 10,207 323,085 3,037 1,260 16,574 552 10,150 18,234 3,250 1,700 123,832 2,644 1,430 241,515 Merchandise trade exports imports $ $ millions millions 2009 2009 18 70 33 33 19 81 88 48 77d 61 39 53 12 21 96 50 11 94 79g 28 47 15 66 87 65 70 37 72 77 79 55 82 19 54 43 32 35 82 67 41 86 94 83 88 73 14 37 90 34 72 55 57 70 22 76 Manufactured exports % of total merchandise exports 2009 1 13 11 1 10 14 12 18 31 31 41 12 11 16 18 5 18 23 16 11 26 13 25 23 20 30 32 10 47 22 High technalogy exports % of manufactured exports 2009 −1,875 −7,572 8,632 −1,369 −47,786 10,995 10,178 3,345 −6,389 3,522 −536 813 −1,175 −24,302 −4,751 −1,709 −164 −866 −1,137 −38,380 4,217 297,142 17,418 −5,001 −2,181 −537 1,670 −3,314 −2,147 11,222 −2,159 −268 −3,349 −373 −2,191 6,814 −51,857 −1,210 165,471 −1,198 −35,913 −403 −232 −449 −699 −26,626 −10,743 27,133 −6,488 7,592 −66,199 142,194 −1,251 −4,248 −1,661 42,668 −102 −7,555 −277 9,381 1,646 31,801 −1,066 −6,228 Current account balance $ millions 2009 185 978 2,847 2,205 3,902 777 22,572 8,714 473 674 1,884 −38,860 93 423 235 25,949 4,595 171 530 340 19,898 42 462 12,7022 78,193 52,395 7,207 951 2,083 1,347 381 2,951 2,666 2,905 2,067 316 6,712 431 221 60 59,989 658 39,153 1,685 2,419 600 50 38 500 2,783 34,577 4,877 3,016 1,070 25,233 3,894 28,976 11,834 2,382 13,619 141 1,506 189 319 4,804 218 1,711 230 543 60 1,387 109 −38 14,462 204 113 13 171 26 10 76 74 110 69 66 49 33 54 50 23 36 77 24 112 38 12 15 11 45 29 46 213 66 27 21 112 61 89 128 19 45 59 66 152 128 23 51 76 87 Foreign Net direct official investment development net inflows assistancea $ $ per capita millions 2009 2009 2,328 4,719 5,345 16,715 120,183 4,935 4,865 23,820 17,158 1,073 5,745 9,583 276,932 40,582 1,835 518 4,364 2,941 396 1,743 71,646 428,442 52,223 12,183 5,041 8,070 11,701 11,003 12,930 33,257 11,384 1,019 5,025 4,231 5,720 13,801 2,926 1,244 3,675 237,692 157,517 13,435 6,615 109,873 8,005 2,900 5,539 24,864 1,660 31,717 2,213 1,093 66,390 2,667 2,029 192,008 Total $ millions 2009 31 24 41 36 10 17 30 12e 16e 45 17 85 17e 13e 38 4e 12e 22e 43 20 24e 20e 27 46e 22 23 16 49 34e 12e 28 27e 33 44e 15e 13e 17 30 27 96 19 36e 78 80 316e 72 17e 16e 31 14e 83e 18 Present value % of GNIb 2009 External debt 68 −9 29 28 20 144 141 23 60 34 119 19 50 58 97 70 15 36 19 178 17 100 145 168 37 −16 54 23 76 62 223 41 21 75 45 113 37 99 130 33 132 28 114 37 26 54 80 69 37 37 −16 225 78 142 323 99 55 45 112 14 10 163 149 −66 70 12 32 137 11 44 1,000 −75 −140 80 30 −75 500 160 −50 −570 200 50 −100 −10 −229 −50 −65 323 −5 −19 1,050 −75 30 −1,731 113 −120 −100 −50 30 −145 10 226 30 −140 −350 −340 −280 55 −300 55 500 −250 550 −51 150 −200 −300 −140 −100 75 −1,000 −730 −500 −577 200 85 1,650 150 250 −100 −189 −30 −75 −75 −13 248 20 −100 −5 −20 130 −202 10 −2,430 Domestic credit provided Net by banking migration soctor % of GDP thousands 2005−10c 2009 23 65 12 67 56 23 10 20 76 10 11 16 86 80 72 79 17 19 41 66 74g 87 47h 73 67 76 90 33 25 75 62 75 80 27 63 72 67 26 55 34 70w 56 59 48 61 59 80 37 51 68 31 73 1,288 3,278 13,863 32,892 2,147 3,764 6,710 4,316 813 4,392 498,330 445,496 24,932 25,545 1,391 3,477 900 1,500 52,500 39,000 120,880 69,292 17,680 31,710 948 7,801 4,328 3,200 3,167 6,940 26,885 21,706 38,436 45,878 134,466 146,626 43,358 69,844 40,633 54,247 303,388 191,803 193 1,227 192,296 95,567 2,180 4,713 8,345 15,582 231 520 269,832g 245,785 55,301 55,980 73,172 62,603 287,567 218,511 10,207 7,345 9,691 7,834 119,839 131,243 155,706 172,850 16,300 10,400 2,569 1,009 6,347 3,096 138,801 152,498 1,500 800 19,096 14,445 140,921 102,129 6,750 6,595 4,310 2,478 45,436 39,703 140,000 175,000 481,707 352,491 1,605,296 1,056,043 6,907 5,386 9,023 10,735 40,597 57,595 69,949 57,096 8,500 5,594 3,793 4,312 2,900 2,269 12,491,383t 12,592,947t 112,493 63,864 3,544,565 3,740,618 865,722 724,117 2,678,489 3,016,877 3,656,996 3,804,486 1,493,538 1,747,540 636,419 657,956 668,496 289,612 323,199 253,161 8,942,776 677,205 276,399 204,760 242,566 8,689,059 912,980 141,321 339,983 198,976 16 41 53 76,629 27,766 38,414 29,096 804,263 13 19 Present value % of GNIb 2009 55 23 18e 23 36e 13e 24 54 18 26 23 35 53 26 8e 20e 71 20e 15 35 73e 39 13e 22 50e 54 35 8e 62 37 12 19 27 17 10e Total $ millions 2009 External debt 3,457 23,752 4,168 8,186 3,633 4,420 991 7,846 53,710 12,418 1,555 4,323 29,593 62,911 117,511 381,339 747 3,503 33,402 444 2,973 42,101 17,208 20,139 5,236 2,514 7,325 58,755 1,640 21,709 251,372 576 2,490 93,153 12,159 4,109 54,503 28,674 6,356 3,049 5,015 s 119,100 3,426,014 904,779 2,521,235 3,545,114 825,602 1,126,252 Foreign Net direct official investment development net inflows assistancea $ $ millions per capita 2009 2009 68 28 88 29 135 31 11 16 19 61 23 15 93 −5 81 83 77 72 22 35 54 12 59 67 −1 75 45 18 55 15 15 43 748 21 98 59 19w 45 11 17 22 20 −465 −4,971 −1,171 −10 36,581 −3,624 −841 −651 21,659 50,122 −3,583 −44 −672 86 247 8,552 −9,598 −23,952 −7,298 49,365 −379 22,765 −1,884 −2,412 −193 32,628 −2,810 −11,327 −80,375 −215 −3,908 31,460 38,972 66 −180 −1,816 21,861 −222 −1,234 −14,410 −451 −1,732 −37,050 −378,435 215 8,561 −6,274 535 −2,565 −406 Current account balance $ millions 2009 128 1,970 881 323 38 33,287 −1,259 434 739 5,787 11,271 2,387 1,773 423 205 4,760 1,948 13,796 2,808 6,310 36,751 119 10,499 208 1,921 74 16,809 −31 108 5,354 6,451 404 2,682 11,538 27,588 1,434 16 415 4,976 50 1,595 8,403 1,355 604 4,816 72,924 134,710 1,262 750 −3,105 7,600 52 129 699 60 1,163,758s 8,168 351,327 92,846 258,481 359,495 101,428 86,161 10 24 10 20 11 66 10 31 14 49 34 17 25 26 3 23 23 5 20w 20 13 21 20 32 High technalogy exports % of manufactured exports 2009 41 66 79 203 67 41 100 22 68 224 154 67 13 37 48 84 39 25 19 47 61 195 53 34 27 46 11 91 54 184 228 40 20 145 191 44 27 18 137 27 68 63 11 89 115 229 232 28 20 123 19 19 169w 38 89 57 98 89 134 48 −1,089 −2,376 −1,810 15,895 −5,214 −172 −425 −20 −500 −100 100 50 −200 −28 −300 135 −1,416 11 −40 −625 −900 −120 200 −200 250 15 150 −100 60 500 20 −250 700 1,750 −300 135 150 100 800 −200 −300 300 −5 −20 −44 −25 −135 −80 343 948 5,052 −50 −400 40 −200 −10 −135 −85 −700 's −2,536 −13,415 −7,916 −5,499 −15,951 −3,781 −1,681 Domestic credit provided Net by banking migration soctor % of GDP thousands 2005−10c 2009 a.Regional aggregates include data for economies not listed in the table World and income group totals include aid not allocated by country or region b The numerator refers to 2009, whereas the denominator is a three-year average of 2007-09 data c Total for the five-year period d Includes Luxembourg e Data are from debt sustainability analysis for low-income countries f Includes Taiwan, China g Includes re-exports h Data on total exports and imports refer to South Africa only Data on export commodity shares refer to the South African Customs Union (Botswana, Lesotho, Namibia, and South Africa) i World total computed by the UN sums to zero, but because the aggregates shown here refer to World Bank definitions, regional and income group totals not equal zero Moldova Morocco Mozambique Myanmar Nepal Netherlands New Zealand Nicaragua Niger Nigeria Norway Pakistan Panama Papua New Guinea Paraguay Peru Philippines Poland Portugal Romania Russian Federation Rwanda Saudi Arabia Senegal Serbia Sierra Leone Singapore Slovak Republic Somalia South Africa Spain Sri Lanka Sudan Sweden Switzerland Syrian Arab Republic Tajikistan Tanzania Thailand Togo Tunisia Turkey Turkmenistan Uganda Ukraine United Arab Emirates United Kingdom United States Uruguay Uzbekistan Venezuela, RB Vietnam West Bank and Gaza Yemen, Rep Zambia Zimbabwe World Low income Middle income Lower middle income Upper middle income Low and middle income East Asia & Pacific Europe & Central Asia Latin America & the Caribbean Middle East & North Africa South Asia Sub-Saharan Africa High income Merchandise trade exports imports $ $ millions millions 2009 2009 Manufactured exports % of total merchandise exports 2009 ... 2. 0 63.4 22 .9 — 22 .9 −163.6 −193.5 − 82. 5 188.0 −75.6 23 3.8 7.4 126 .2 98.4 1.8 2. 4 −0 .2 2.1 2. 1 2. 1 — — 7550 −71.6 410 .2 −563 .2 −1 52. 9 23 8.8 −169.1 −83.3 25 5.4 21 2.9 −40.8 22 .0 − 52. 7 5.0 9.4... 2. 8 27 .2 27 .2 27 .2 — — 1,156.1 305.4 1,581.4 −1, 327 .2 254 .2 171 .2 −193.3 23 2.1 144.6 −114 .2 2 62. 4 49.5 −6.6 4.6 4.8 −0 .2 310.0 22 1.4 −60 .2 185.1 −7.6 −8.4 0.8 31.7 31.4 0.3 — — — −116.3 24 .5... 368 57 12 52 536 400 55 30 51 66 84 85 78 75 179 693 388 62 243 1, 920 617 3 42 961 6, 025 1, 5 32 2, 426 2, 067 10, 506 2, 6 52 4, 329 3, 525 16, 0 82 4, 307 6, 336 5, 439 15, 713 4, 6 82 5, 922 5,