This blog contains posts and comments written by students in Dr. Tufte's economics classes at Southern Utah University.
3/24/2007
World Economy
I recently read the news article "IMF chief continues to be bullish on world economy" and found it quite interesting how they treated the United States role in the global economy. The author looked at the world as a whole and believed that as a whole it was doing well. It praised countries such as China and India for its growth. It looked at the US with a little hesitancy because of some turbulence in the financial markets. It suggested that there would be a slowdown in the US. This was interesting because no longer are people looking only at one country. The US may be slowing, but China and India are booming. I think this is good for everyone. No longer are people restricted to the confines of one country. It they are looking to invest or improve, they can look to other places besides their own country. I see the economy of the world as almost always increasing. No matter what there will always be one country that is doing well. The only hope is that it is not at the expense of another country. I think the Global economy will continue to grow. The only thing that would slow it down is if multiple big countries experienced a slow down. I just don't see that happening any time soon.
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3 comments:
There is a lot of talk about the growth in China and India. This shouldn't be too surprising once we realize their populations. It was only a matter of time when their governments would allow them to grow. The only problem I see with this growth is greed. I agree with Bend that it would be great if a country could grow, but not be at the expense of another country. However, because we live in a global economy, I don't believe that is possible in the long run. When countries want to grow, they get greedy. When they get greedy, we head to war!
I think in the short-run it sometimes is inevitable to have growth of one country at the expense of another. The theory of international trade provides a simple but effective way of explaining the short and long run effects of free trade without war. Imagine if both France and Switzerland were producing cheese and wine in their own countries, and not have free trade. Both countries could be fine, but would be better off with no trade restrictions. The reasoning behind this is that if France would be able to make wine more efficiently than Switzerland, and Switzerland would be able to make cheese more efficiently than France, as a whole they would be better of producing (specializing) only that product. If however free trade would be possible overnight there would still be cheese producers in France and wine producers in Switzerland that would suffer losses in the short run. In the long run however they would shift their resources to add value elsewhere.
As a macroeconomist, I regard this sort of speculation as a poor idea. There is a great deal that is unpredictable in the near term when doing this sort of forecasting.
I think I can make much better predictions at 50 years than I can at 5. In 50 years, I see the Indians still poorer than the Chinese who are still poorer than us, but all three economies will have about the same GDP.
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