What has happened during globalization? (I)
Expansion of trade
The value of exports has grown continuously from 1800 to 2008 (from 2008 to 2014
has fluctuated more). Until 1900 there is almost no growth, in comparison with the big “boom”
after the 1950. After 1929 and continuing towards 1950 and later trade increases constantly,
except for the 1973 crisis, the 1981 recession and the 2008 global crisis.
Nowadays, for the first time since WWII there are groups advocating for more
protective policies. The reality is that most of the products that we consume are imported
from elsewhere (at least the components of it). We live in a world where what we have is
made somewhere else.
Trade Openness= (Exports/GDP) *100
Trade Openness= [(Exports +Imports)/GDP) *100
The second measure is better for just a country, and when we refer to the world the
best one is the first, because exports, at a world level, are the same as imports. Exports, from
1870 to 1930, grew faster than GDP, countries were turning more open. After 1929 and until
1945 countries turned more protectionist, exports grew much less than GDP, and decreased as
themselves a lot. During 1970 and the start of the 80’s exports dropped, also in 2008.
Nowadays is seems to be a tendency towards protectionism (Trump). If the US turns more
protective all the world is affected by it. Trump declared that he was for trade, but for “fair
trade”, which actually means that they are going to carry protectionist policies.
The financial crisis of 2008 affected world merchandise trade a lot, but not so much
commercial services trade.
On trade, from most trade to less trade: West Europe>Asia>North America. It is often
said that the US can afford being protectionist because it is a big country. Also, from 1990 to
1999 the % trade in comparison with the world, even if the European Union was created,
declined in Europe, with a small increase in North America. The creation of the single market
did not affect trade in Europe because Asia was becoming the big trading block that we know.
In Asia there were countries experimenting a tremendous economic transformation. From
2005 to 2015 Asia is getting bigger and bigger in terms of trade, and Europe is reducing the
percentage of the world trade that happens there.
These 10 countries compose the 52% of world merchandise trade.
oMore trade: EEUU, Germany, France, Britain, China and Japan.
oThen: Spain, Italy, India, Russia and Thailand.
The top 10 traders in commercial services accounted for 53% of the world’s
total trade in 1915.
Most of world’s trade takes place between Europe, North America and East Asia,
between each other and inside themselves. In terms of trade balance (Difference between
exports and imports), US and UK have the biggest trade deficits in the world, the import much
more than they export, which is not economically a bad thing, but in the US is believed to be
the main factor for a lot of bad things that happened in the US. For more than 30 years, in the
US, specially trade unions, have blamed the decline in wages and the loss of jobs, where
evidence shows that trade deficit is not the main factor for this (this believe is really deeply
ingrained). In reality, in the UK, the trade deficit is even bigger, and in GB they would say you
that the British economy is really small and must stay open, they don’t make a big deal about
the trade deficit. Another funny thing is that, the trade deficit in the US, in comparison with its
