Current situation in world economy > > > > > > > > > > > > > > > > > > > > > > > > > > > The course schedule Japan USA RZ/EU Rusko ČSR USA Developing /EU Russia Czechoslovak 19. století 20. léta Velká hospod. krize Poválečný zázrak Ropné šoky + měnové systémy 19th century 20s Great depression Golden years Oil shocks + currency systems Úvod Chronologicky Centers Contemporary Introduction Chronological 2 13 11 10 9 8 7 6 5 4 3 1 12 Content A.Long-term trends B.Current economic situation by regions C.Globalization • • Obsah obrázku mapa Popis byl vytvořen automaticky • Obsah obrázku mapa Popis byl vytvořen automaticky Whenever science and religion in conflict – religion is always right • • • • • • Obsah obrázku mapa Popis byl vytvořen automaticky Content A.Long-term trends B.Current economic situation by regions C.Globalization CURRENT ECONOMIC SITUATION BY REGIONS 1.Asia – Japan, Southeast Asia, China 2.Africa 3.America – Latin America, USA 4.Europe • A1. Japan •since 2008 recession – huge decline •2011 nuclear power plant •sluggish economic growth –new taxis … – •enormous debt • •society highly conservative and homogenous … now advantage Ekonomický růst • Crisis in Southeast Asia ·before 1996 −significant growth + balanced state budgets (even surpluses) + current account deficit considered as normal (support of INV) ·ð inflow of foreign capital -acceleration after 1995 (Mexico) + ñ after 1996 -mainly short-term capital in the form of bank loans •1997 outflow of capital (7% GDP) – mainly bank loans Net foreign capital inflow to Asia (USD billion) 1991 1992 1993 1994 1995 1996 1997 Inflow total 29 30.3 32.6 35.1 62.9 72.9 -11 Direct investment 7.2 8.6 8.6 7.4 9.5 12 9.6 Portfolio investment 3.3 6.3 17.9 10.6 14.4 20.3 11.8 Others 18.5 15.4 6.1 17.1 39 40.6 -32.3 ·July 1997 - Thai baht abandoned the fixed exchange rate system ð ò exchange rate + ò share prices + ñ capital outflows (also domestic) ·ñ debt service+ ñ risk + ò price of real estates ð banks in problem ·spread of the crisis ·ò baht ð ñ other currencies ð ò their competitiveness ·investors assumed that local countries had similar problems ·regional linkage – mainly bank loans •monetary crisis -> into real economy • ò INV + ò C (b/c ò private incomes) ð ñ U + ò production –+ bad situation in Japan •help of the IMF BUT „advices“ – ñ r ux ò exchange rate uhigh indebtedness ux speculations –+ structural reforms in the financial sector –+ relatively loose fiscal policy lð ò exchange rate stopped + later also ñ BUT ò econ. performance •criticism against IMF –same solutions for different problems –too strict restriction –moral hazard – Changes in real GDP (in %) and exchange rates (won per dollar) in Korea, 1990-2008 A1. China •gradualist reforms since 1979 •1989 Tiananmen •long term stable economic and political situation •high economic growth but from low bases •special economic zones •high percentage of SOE … banks •2002 WTO •2008 strong impact on prices of commodities •today –covid –state own companies … banks –growing old of population –minorities … –gini 46 … • • • • A2. Africa •good perspective: –cheap LF –commodities •huge differences among countries •recently – é GDP – é trade • debts + quality of LF + productivity + economic policy + lack of capital + AIDS •political regimes change GPD/cap 2008-2022 Democratization Fertility rate, total (births per woman) - Sub-Saharan Africa • • • Electrification in Africa 2018-20 Obsah obrázku mapa Popis byl vytvořen automaticky • • • • A3. Latin America •relatively stable situation •experience with high inflation, slow econ. growth, dictatorships •econ. reforms + econ. ñ + stable price level •2001 econ. crisis in Argentina uFixed exchange rate pegged to dollar – devaluation in Brazil ustate bankruptcy + devaluation –problems in banking sector •2008 crisis only slowing down •gini high – Brasil > 50 … •political turmoils … turn to left A3. USA •very long conjuncture •low unemployment •banks OK •relatively high inflation … restrictions • •trade war •leadership :-( Unemployment in USA and EU, 1991-2021 (in %) The great recession (2008) •center USA –monetary expansion dealing with 2001 crisis –mortgages … banks … problems with financial sector –spread to real economy •interdependence in the WE … spread of the crisis to other countries •expansive EP –problems if expansive policies already before the crisis World GDP A4. Europe •slow dynamics •unemployment •reforms – liberalization (posts, ... ), CAP ... •Stability and Growth Pact •Lisbon Strategy -> Europe 2020 •different course of crisis among the member states –serious problems – Ireland, Hungary, …, Island vs. Poland •Brexit … •Covid •Ukraine •Hungary and Poland • Eurozone crisis •Greece •Ireland, Portugal, Spain, Italy • =PIIGS •public sources in successful years •pressing solution – money to Greece or … •fiscal restriction – different attitudes •medium-term – fiscal integration – at least budget controls Labour costs index, 2000-2011 • Ireland Spain France Portugal Germany Greece Current account, 1999-2013 • Spreads in interest rates on sovereign bonds (as compared to German bonds) Eurozone inflation 9/2022 • COVID AND WAR •Disruption of trade routes •Inflation světové ceny obilí Content A.Long-term trends B.Current economic situation by regions C.Globalization GLOBALIZATION • Nutela Apple - iphone • • C. Globalization •no single definition ð various explications –ñ interdependence in the WE •both advantages and disadvantages •pros: –ñ competition (?) ð efficiency – better allocation of resources –ñproduction (?) –technological and knowledge spillover –better economic situation in DC (?) –ò role of governments –ò danger of international conflicts (?) – – •ambiguous: –interdependence uGDP growth in USA help to other countries vs current situation uprices … u •cons: –ò role of governments (?) –loss of own culture and identity (?) –ñ income differences (?) –Persistant impact on certain groups of population umainly unqualified labor force in advanced economies C1. Integrace •international agreements (see previous lectures) –the most important one – EU + last lecture dnes –today at least 80 regional agreements •also arguments against international agreements –higher internal competition but higher protection against third parties ue.g. EU or MERCOSUR C2. International trade •enormous ñ international trade after WWII –GATT ð WTO •but the majority of world trade between relatively close states •within the last 20 years ñ world trade was two times higher than ñ world GDP (6% X 3%) •pros: –intention to maintain free trade in crisis ulessons from the development in 1930s ñ protectionism within the bounds of possibility –dispute settlement via WTO –new round of negotiations but only limited progress Threats for international trade •USA - EU disputes –USA: steel, agricultural products, … •pressure groups – e.g. Seattle –ecology + agriculture + human rights + ... •antidumping –huge number of cases – agenda of the WTO –abuse uReal dumping only in 3% of the cases in EU and 4% in USA •regional blocks lð the most affected states = DC –liberalization – only trade with products 250 – 630 mld $ per year – DC 1/3 – ½ • PEW, 2010 • C3. Capital flows •short-term capital –speculative capital – What does it mean? •foreign direct investment (FDI) –in advanced economies to services –in DC to manufacturing industry –majority between advanced economies (EU - USA) ufinancing of advanced from DC –investors´ preferences uknowledge of environment, low risk, political and economic stability, similar culture and level of development ð incentives not so important –FDI may u push out the domestic firms + abuse their economic power + make more difficult to get loans C4. Labour flows •Gastarbeiters –Ukrainians in the CR –Threat for employmet in the CR? •remittances •political x economic emigration •in general – the least connected international market –relatively small migration also within the EU Proportional share of remittances in GDP in selected countries in 2012 (% of GDP) Global remittances and other transfers across the borders C6. Technologies •telecommunication •information technologies –within the last 30 years ò real prices of computer processing by 99,999% = ò by 35% per year –ò prices ð faster implementation than electricity or steam –USA unambiguous leader u advantages for the followers –possibility for imitation and lessons from previous mistakes –nowadays – increasing productivity •+ development of new technologies –biotechnology and genetics - GMO •discoveries mainly in inter-disciplines Thank you for attention today and during the whole semester Good luck