This chapter discusses international trade concepts including comparative advantage, gains from specialization and trade, exchange rates, trade barriers, and trade agreements. It provides data on the volume and composition of US trade, top exporters, and import and export partners. Government intervention in trade and debates around trade policies are also summarized. Key terms related to international economics are defined.

1. The United States in the Global Economy Chapter 5 Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

3. International Linkages United States Economy Other National Economies Goods & Services Capital & Labor Information & Technology Money 5-

7. Exports of Goods and Services Belgium Netherlands Germany South Korea Canada Italy France New Zealand Spain United Kingdom Japan United States Source: IMF, International Financial Statistics, 2007 5- 12% 91% 75% 47% 45% 35% 29% 27% 27% 26% 25% 18%

8. United States Trade Percentage of GDP, adjusted for inflation, billions of 2000 dollars Source: Bureau of Economic Analysis Percentage of GDP Imports Exports 5-

9. U.S. Imports and Exports Billions of dollars, 2007 Chemicals Consumer Durables Agricultural Products Semiconductors Computers Generating Equipment Automobiles Aircraft Medical Equipment Fuels and Lubricants Petroleum Automobiles Household Appliances Computers Metals Clothing Consumer Electronics Generating Equipment Chemicals Aircraft Source: Department of Commerce Data 5- Exports Imports $94.1 70.9 77.6 50.2 42.9 41.5 43.6 48.6 32.0 47.7 $331.0 133.8 112.1 104.0 115.7 86.3 94.7 55.0 56.2 34.4

10. U.S. Imports and Exports Goods by area – 2007 Canada European Union Mexico China Japan OPEC countries All other TOTAL Canada European Union Mexico China Japan OPEC countries All other TOTAL Exports to Imports from Source: Survey of Current Business, April 2006 Value Value $250 242 136 65 61 49 346 $1149 $317 356 214 322 146 174 436 $1965 Imports Exceed Exports by $816 Billion 5-

11. Exports of Goods Source: World Trade Organization Germany United States China Japan France Netherlands Italy United Kingdom Canada Belgium South Korea Mexico Russia Taiwan Singapore 0 100 200 300 400 500 600 700 800 900 $912 $819 $593 $566 $449 $358 $349 $347 $317 $307 $254 $189 $184 $183 $180 Billions of dollars, 2006 5-

17. Exchange Rates One U.S. dollar will buy 39.17 Indian rupees .51 British pounds 1.01 Canadian dollars 10.94 Mexican pesos 1.12 Swiss francs .68 European euro 109.87 Japanese yen 937.38 South Korean won 6.42 Swedish kronors January 2008 5-

18. The Foreign Exchange Market Dollar – Yen Market P Q Quantity of yen Dollar price of 1 yen .01 Q e D y S y Exchange Rate: $.01= ¥1 5-

26. Top Globalized Economies Source: A. T. Kearney, Foreign Policy 1-Singapore 2-Hong Kong 3-Netherlands 4-Switzerland 5-Ireland 6-Denmark 7-United States 8-Canada 9-Jordan 10-Estonia 11-Sweden 12-United Kingdom 2007, based on 13 key indicators 5-

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