Divergent Growth Rates
Divergent Growth Rates
Economic Level ot Countries One of the most common-ways of classifying
countries is by their level of economic or industrial development. The high-
income countries (Western Europe, the United States, Canada, Australia,
New Zealand, and Japan) are usually referred to as industrial, developed, or
First World countries. The communist countries and those undergoing tran-
sition from communism have been known as centrally planned economies
(CPEs), non-market economies (NMEs), or Second World countries, regardless of whether they have high or low incomes. One still encounters all these terminologies; however, the terms Second World countries and historically planned economies (HPEs) are presently more descriptive because some former CPEs are in transition from their historic economic systems. Other countries are referred to as developing countries, less-developed countries (LDCs), or Third World countries. One should be aware that there is considerable disagreement on where to place certain countries within these categories, particularly countries undergoing changes in their economic systems or in their income levels. For example, it is common to find a country listed as a First or Second World country in one set of statistics compiled by an international agency and as a Third World country in another. This lack of uniformity underscores the rapid pace of change in many countries today and the fact that useful in the aggregate, these labels do not depict the complexity of a given country's economic status. Unfortunately, because of these inconsistencies, some of our statistics and discussions may not be totally consistent either.
Although there is a lack of accurate historic trade figures for the HPEs, most estimates have put their share of world trade at only about 10 percent. Where more accurate figures on world trade are available, we find that LDCs have a very low share (see Fig. 1.2), primarily because of their heavy dependence on agricultural products and raw materials for their export earnings. Because of the economic and technical factors discussed earlier, earnings from these types of exports have not kept pace with earnings from manufactured goods. In manufactured production the developed countries have advantages in world markets because of their technology and their ability to reduce costs through large-scale production. In many cases the LDCs have insufficient domestic production or resource capacity to supply their own needs, much less those of other areas.
In spite of these obstacles, there has been a turnaround in the trade position of some LDCs thanks to three major factors. Foremost has been the ability of oil-exporting countries to raise the price of petroleum exports substantially, especially during the 1970s, when the price of oil exports increased more than 1200 percent.5 Prices fell after 1981, but not nearly as much as they had risen. Further Persian Gulf hostilities could lead to further price rises. A second factor has been the rapid industrialization of a number of LDCs, such as Brazil and Taiwan, now sometimes referred to as newly industrialized countries (NICs). A third factor has been the easier access to industrial countries' markets for LDCs' manufactured products. At the United Nations Conference on Trade and Development (UNCTAD) in 1964, developing countries began to pressure the industrial nations to give preference to manufactured exports from developing countries. By the end of the 1970s every industrial country had policies allowing LDC manufacturers easier access than industrial manufacturers. In spite of this turnaround for some LDCs, most LDCs have been able neither to export petroleum nor to industrialize rapidly. For them, there has been a downward trend in share of world trade.
Given the difficulties experienced by the LDCs, it is not surprising that nine of the ten largest exporters and nine of the ten largest importers are industrial countries (see Table 1.1). The only exception is the former Soviet Union, an HPE. Six countries are members of the EC and conduct a large portion of their trade among themselves, there being far fewer restrictions among EC members than between the EC and other countries.
Twentieth-Century Changes in U.S. Trading Partners The major change in U.S. export markets during this century has been the decline in the relative importance of Europe as a trading partner. Before the turn of the century more than 80 percent of U.S. exports were sent to Europe, by the 1920s the figure had dropped to about 50 percent, and by the 1990s it was about 30 percent. The biggest gain in exports has been to Asia. Exports to Asia have grown from less than 1 percent at the turn of the century to over 30 percent now, making Asia a larger export market for U.S. products than Europe.6 Canada is the largest importer of U.S. products.
For U.S. imports, the big losers in proportionate share in this century have been Europe and Latin America. Purchases from Europe, which constituted about half of U.S. imports at the turn of the century, have been between
20 and 30 percent per year since the early 1920s. Purchases from Latin America made up about 30 percent of U.S. imports until 1960; since then the figure has fallen steadily and is now about 15 percent. The major gains in import share over this century have been from Canada and Japan. The growth for Canada has been fairly steady, from about 5 percent early in the century to about 20 percent currently. Japan also accounts for about 20 percent of U.S. imports, but its growth has been very recent. Japan and Canada are the largest exporters to the United States. The proportion of imports coming from Asia has grown from a turn-of-the-century figure of about 15 percent of total U.S. imports to about 35 percent now.
Since 1970 the relative importance of U.S. trading partners has shifted considerably, due primarily to three factors: shifts in petroleum trade, foreign policy changes, and greater industrialization of certain Asian countries. Because of increased revenues from oil sales, Mexico, Saudi Arabia, and Venezuela have become more important markets. The People's Republic of China, the former Soviet Union, and Egypt have become more prominent because of foreign policy changes. Increased income from industrialization in Thailand, South Korea, Taiwan, and Malaysia has been responsible for their purchasing a larger share of total U.S. exports. The United States brings in a larger portion of its imports from Mexico and Norway because they became new oil suppliers and from Japan, Taiwan, South Korea, and Singapore because of their new industrial production capabilities. The biggest losers in export share to the United States since 1970 have been Canada and Germany.
Economic Level ot Countries One of the most common-ways of classifying
countries is by their level of economic or industrial development. The high-
income countries (Western Europe, the United States, Canada, Australia,
New Zealand, and Japan) are usually referred to as industrial, developed, or
First World countries. The communist countries and those undergoing tran-
sition from communism have been known as centrally planned economies
(CPEs), non-market economies (NMEs), or Second World countries, regardless of whether they have high or low incomes. One still encounters all these terminologies; however, the terms Second World countries and historically planned economies (HPEs) are presently more descriptive because some former CPEs are in transition from their historic economic systems. Other countries are referred to as developing countries, less-developed countries (LDCs), or Third World countries. One should be aware that there is considerable disagreement on where to place certain countries within these categories, particularly countries undergoing changes in their economic systems or in their income levels. For example, it is common to find a country listed as a First or Second World country in one set of statistics compiled by an international agency and as a Third World country in another. This lack of uniformity underscores the rapid pace of change in many countries today and the fact that useful in the aggregate, these labels do not depict the complexity of a given country's economic status. Unfortunately, because of these inconsistencies, some of our statistics and discussions may not be totally consistent either.
Although there is a lack of accurate historic trade figures for the HPEs, most estimates have put their share of world trade at only about 10 percent. Where more accurate figures on world trade are available, we find that LDCs have a very low share (see Fig. 1.2), primarily because of their heavy dependence on agricultural products and raw materials for their export earnings. Because of the economic and technical factors discussed earlier, earnings from these types of exports have not kept pace with earnings from manufactured goods. In manufactured production the developed countries have advantages in world markets because of their technology and their ability to reduce costs through large-scale production. In many cases the LDCs have insufficient domestic production or resource capacity to supply their own needs, much less those of other areas.
In spite of these obstacles, there has been a turnaround in the trade position of some LDCs thanks to three major factors. Foremost has been the ability of oil-exporting countries to raise the price of petroleum exports substantially, especially during the 1970s, when the price of oil exports increased more than 1200 percent.5 Prices fell after 1981, but not nearly as much as they had risen. Further Persian Gulf hostilities could lead to further price rises. A second factor has been the rapid industrialization of a number of LDCs, such as Brazil and Taiwan, now sometimes referred to as newly industrialized countries (NICs). A third factor has been the easier access to industrial countries' markets for LDCs' manufactured products. At the United Nations Conference on Trade and Development (UNCTAD) in 1964, developing countries began to pressure the industrial nations to give preference to manufactured exports from developing countries. By the end of the 1970s every industrial country had policies allowing LDC manufacturers easier access than industrial manufacturers. In spite of this turnaround for some LDCs, most LDCs have been able neither to export petroleum nor to industrialize rapidly. For them, there has been a downward trend in share of world trade.
Given the difficulties experienced by the LDCs, it is not surprising that nine of the ten largest exporters and nine of the ten largest importers are industrial countries (see Table 1.1). The only exception is the former Soviet Union, an HPE. Six countries are members of the EC and conduct a large portion of their trade among themselves, there being far fewer restrictions among EC members than between the EC and other countries.
Twentieth-Century Changes in U.S. Trading Partners The major change in U.S. export markets during this century has been the decline in the relative importance of Europe as a trading partner. Before the turn of the century more than 80 percent of U.S. exports were sent to Europe, by the 1920s the figure had dropped to about 50 percent, and by the 1990s it was about 30 percent. The biggest gain in exports has been to Asia. Exports to Asia have grown from less than 1 percent at the turn of the century to over 30 percent now, making Asia a larger export market for U.S. products than Europe.6 Canada is the largest importer of U.S. products.
For U.S. imports, the big losers in proportionate share in this century have been Europe and Latin America. Purchases from Europe, which constituted about half of U.S. imports at the turn of the century, have been between
20 and 30 percent per year since the early 1920s. Purchases from Latin America made up about 30 percent of U.S. imports until 1960; since then the figure has fallen steadily and is now about 15 percent. The major gains in import share over this century have been from Canada and Japan. The growth for Canada has been fairly steady, from about 5 percent early in the century to about 20 percent currently. Japan also accounts for about 20 percent of U.S. imports, but its growth has been very recent. Japan and Canada are the largest exporters to the United States. The proportion of imports coming from Asia has grown from a turn-of-the-century figure of about 15 percent of total U.S. imports to about 35 percent now.
Since 1970 the relative importance of U.S. trading partners has shifted considerably, due primarily to three factors: shifts in petroleum trade, foreign policy changes, and greater industrialization of certain Asian countries. Because of increased revenues from oil sales, Mexico, Saudi Arabia, and Venezuela have become more important markets. The People's Republic of China, the former Soviet Union, and Egypt have become more prominent because of foreign policy changes. Increased income from industrialization in Thailand, South Korea, Taiwan, and Malaysia has been responsible for their purchasing a larger share of total U.S. exports. The United States brings in a larger portion of its imports from Mexico and Norway because they became new oil suppliers and from Japan, Taiwan, South Korea, and Singapore because of their new industrial production capabilities. The biggest losers in export share to the United States since 1970 have been Canada and Germany.
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