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What Happened to World Trade, 1929-1933 ($Millions)

What Happened to World Trade, 1929-1933 ($Millions). April. May. March. 1929. 1930. February. 1931. June. 1932. 1933. 2,739. 1,206. January. July. 2,998. 1,839. 992. August. December. September. November. October.

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What Happened to World Trade, 1929-1933 ($Millions)

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  1. What Happened to World Trade, 1929-1933 ($Millions) April May March 1929 1930 February 1931 June 1932 1933 2,739 1,206 January July 2,998 1,839 992 August December September November October

  2. Transport and Communication Cost, 1930-1990 (Index 1930 = 100) Index (1930 = 100) Average ocean freight and port charges per short ton of cargo 120 Average air-transport cost per passenger mile 100 80 Cost of a 3-minute phone call New York to London 60 40 20 0 Year 1930 1940 1950 1960 1970 1980 1990

  3. Trade Patterns Globalization of US economy Increased imports as well as exports US ranks as the world’s greatest exporter Openness: The nation’s exports and imports expressed as a percentage of its GDP

  4. Regional Flows of Merchandise Trade

  5. Benefits of International Trade • Not Exports but Imports! • Not jobs (in the macroeconomic sense) • US unemployment returns to its natural rate of between 5 – 6% • Total employment grows with the labor force • Might not be true in LDC • We will study the effects of trade on wages in certain industries and sectors. • Trade is about efficiency, lower prices and more consumer and producer choice.

  6. Pros and cons of globalization • Advantages • Productivity increases faster when countries produce according to comparative advantage • Global competition and cheap imports keep prices low and inflation at bay • An open economy encourages technological development and innovation with ideas from abroad • Jobs in export industries pay more than those in import-competing industries • Free movement of capital gives access to foreign investment and keeps interest rates low

  7. Pros and cons of globalization • Disadvantages • Millions of US jobs lost to imports or production abroad; those displaced may find lower-paying jobs • Workers’ increased anxiety about getting laid off • Pressure for slower wage increases under threat of jobs moving abroad • White-collar jobs, like blue-collar jobs, are now vulnerable to moving overseas (outsourcing) • US workers may lose their competitiveness if firms build state-of-the-art factories in low-wage countries

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