Abstract
The global economic crisis sent world trade volume and world production into retreat and threatened a second Great Depression. There has emerged a consensus that global imbalances – fundamentally reflected in the over-reliance upon the United States (US) consumer market – that built up over the first decade of the 21st century are no longer sustainable. Deficit regions led by the US will have to increase net exports in real terms in order to restore living standards and employment. Surplus regions, Asia, in particular, will have to rely more upon domestic demand and will have a substantial role to play as growth centers for net imports from the rest of the world. This paper examines the composition and prospects for growth of US net exports to the world and to developing Asia. We find that much of the apparent shift in export product shares was a result of the worldwide collapse in demand for high-technology products particularly new aircraft and information technology products. Nonetheless, India, ASEAN-10, and the newly industrialized economies are destinations for US high-technology products to an even greater extent than for the world as a whole. In contrast, the People’s Republic of China tends to import a lower portion of high-technology products but a larger share of agriculture-related and raw materials and energy products than the world as a whole.
Highlights
During the high-growth years prior to the global financial crisis, developing Asia’s prosperity was furthered by the United States (US) absorbing much of the large and expanding volume of global exports
We propose that now is the time to debunk this myth as Asia must come to terms with emerging challenges in energy use, production, and consumption; with health challenges from an aging work force and population; and with an environmental challenge of utmost importance to the ability of our globe to continue to support the emergence of new prosperity, and to safeguard the advances of the past few hundred years
Extending the analysis further to four subcategories or factor intensities (Table 3, rows 2–5) reveals a negative correlation from 2006 to 2008 in one category: low-technology manufactures (LT). This is due to the fact that despite the US recording positive net exports of LT manufactures to the world, it is a net importer of this type of product in developing Asia
Summary
During the high-growth years prior to the global financial crisis, developing Asia’s prosperity was furthered by the United States (US) absorbing much of the large and expanding volume of global exports. The US remains the preeminent producer and exporter of many high-technology products— these account for the largest real volume of US net exports in recent years.1 This competitiveness derives from many scientific and research advantages including the US education system, the tertiary or university system (Cole 2009). The recognition that international trade has a significant role in global economic growth prospects has been celebrated in endogenous growth modeling (Acemoglu 2009) and has been featured prominently in research using computable general equilibrium models Both approaches suffer from weaknesses in underlying theoretical foundations and lack strong empirical grounding.
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