INTERNATIONA

L ECONOMICS
BSA 201

& BSCA II BONIFACIO

Martin S. Hernandez, EdD

Instructor
Dear Lord and Father of all,
Thank you for today.
Thank you for ways in which you
provide for us all. For Your
protection and love we thank you.
Help us to focus our hearts and
minds now on what we are about
to learn.
Inspire us by Your Holy Spirit as
we listen and write.
Guide us by your eternal light as
we discover more about the world
around us.
We ask all this in the name of
Jesus.
Amen.
Objectives
At the end of the presentation the
learners/students will be able to:
GLOBAL
1. Understand the role of the United
States in the global economy; ECONOMY
2. Explore international economic
institutions; and
3. Evaluate the challenges and
opportunities of global economic
integration.
Add me to
Get me
Answer: Global Economy
Answer: United States
Answer: World Bank
 The US in the Global Economy/
International Economic Institution

Magsaysay, Gabriel
 The US Economy
The United States has one of the largest and most influential economies in the world.

1. Key Economic Indicators:

a. Gross Domestic Product (GDP)

The US has the largest GDP in the world. It represents the total value of all
goods and services produced within country’s borders.

b. Unemployment Rate
Prior to the COVID-19 pandemic, the US unemployment rate was relatively
low, averaging around 3-4%. However, the pandemic caused a significant increase in
unemployment, with rates peaking at over 14% in April 2020. Since then, the rate has
declined and was around 5%.
c. Inflation
In recent years, the US has experienced relatively low inflation, with rates typically
ranging between 1-3%. However, due to the pandemic-induced disruptions and government
stimulus measures, there has been some upward pressure on prices.

2. Role of the US as the World’s Largest Economy

• The US dollar is the world's primary reserve currency, and many international transactions
are conducted in dollars.

• The US also attracts substantial foreign direct investment and has a highly developed
financial sector.

• The US has a diverse and robust economy, with strengths in various sectors such as
technology, finance, manufacturing, and services. It is home to many multinational
corporations and is a hub for innovation and entrepreneurship.
3. Major Sectors:

a. Manufacturing:
Manufacturing has traditionally been a significant sector in the
US economy, although its relative importance has declined over the
years.

b. Services:
The services sector is the largest contributor to the US economy,
accounting for the majority of GDP and employment.

c. Technology:
The US is a global leader in technology and innovation.
International Trade and Investment

1. The US as a Major Player in Global Trade

• The United States is one of the largest participants in

international trade, both in terms of exports and imports.

• It has a highly developed and diverse economy that allows it to

engage in a wide range of trade activities.

• The US exports a variety of goods and services, including

machinery, aircraft, automobiles, agricultural products,
pharmaceuticals, and financial services.
2. Key Trading Partners:

a. China
b. Canada and Mexico
c. European Union

3. Trade Deficit and its Implications:

The US has consistently experienced a trade deficit, which means that it imports
more goods and services than it exports. The trade deficit occurs due to a variety of factors,
including differences in production costs, exchange rates, consumer preferences, and global
supply chains.
Implications of the trade deficit include:

a. Economic Impact: The trade deficit can lead to a reduction in domestic

production and employment in certain industries that face competition from
imports.

b. Foreign Debt: To finance the trade deficit, the US must borrow from
foreign investors and countries. This can lead to an increase in foreign debt
and make the economy vulnerable to changes in international capital flows.

c. Exchange Rates: The trade deficit can put downward pressure on the
value of the US dollar relative to other currencies, as there is increased
demand for foreign currencies to pay for imports.
 The US in the Global Economy/
International Economic Institution

AGOJO, ROSE ANNE D.

Role of International Economic
Institutions
Three global organizations playing a major role in
international economic relations are:

World Bank

International Monetary
Fund (IMF)

World Trade
Organization (WTO)
 World Bank
 The World Bank is an
international financial
institution that provides
loans and grants to
developing countries
for development
projects.
International Monetary Fund (IMF)

 The IMF is an international

organization that promotes
global monetary
cooperation, financial
stability, and economic
growth.
 World Trade Organization (WTO)

 The WTO is an international organization

that deals with global trade rules and
negotiations.
US and the World Bank

US involvement and contributions to the World Bank:

 The United States has been a key player in the World

Bank since its establishment in 1944.

 As the largest shareholder, the US has significant

influence over the bank's policies and operations.

 The US contributes financially to the World Bank through

its annual subscription payments and additional
contributions to specific funds and initiatives.
 US and the International
Monetary Fund (IMF)

US contributions and influence in the IMF:

 The United States is a key member of the IMF and has significant
contributions and influence within the organization.

 The US is the largest shareholder in the IMF, holding the largest

number of voting shares, which gives it considerable influence
over major decisions and policies.

 The US has played a crucial role in shaping the IMF's policies,

reforms, and lending programs, often exerting its influence to align
them with its own economic and geopolitical interests.
US and the World Trade Organization
US participation and contributions to
the WTO:

 The United States has been a member of the WTO since

its establishment in 1995.

 As one of the world's largest economies, the US plays a

significant role in shaping the organization's policies and
decisions.

 The US has actively participated in various WTO

negotiations, including those on agriculture, services,
intellectual property, and market access.

 The country has also contributed financially to the WTO's

budget and has been actively involved in the dispute
settlement process.
Economic Challenges faced by the US in the Global Economy

Trade Tensions

Income Inequality

Technological Advancement

Fiscal Sustainability
Opportunities for the US in
the International Economic
Cooperation

Market Access

Innovation and Technology

Exchange

Addressing Global Challenges

Investment and Infrastructure

Development
 TERMINOLOGIE
S
1. Gross Domestic Product (GDP) – Measures the total value of all goods and
services produced within a country’s borders over a specific period.

2. Trade Deficit – The negative balance when a country imports more goods and
services than it exports.

3. Trade War - A situation where countries impose tariffs or other trade barriers on
each other in an attempt to protect domestic industries or gain a competitive
advantage.

4. Tariffs – Taxes imposed on imported goods to protect domestic industries from

foreign competition.

5. Exchange Rate – The value of one country’s currency compared to another

country’s currency.
 TERMINOLOGIE
S
6. Inflation – The rate of increase in prices over a given period of time.

7. World Bank - An international financial institution that provides loans and

grants to the governments of poorer countries for the purpose of pursuing
capital projects.

8. International Monetary Fund (IMF) - An international financial institution

that provides financial and technical assistance to member countries.

9. World Trade Organization (WTO) - An international organization that

deals with the global rules of trade between nations.

10. Foreign Direct Investment (FDI) – When a company or individual from

one country invests in another country’s businesses, infrastructure or
projects.
 SUMMARY

 The US plays a major role in the global economy as one of the

world's largest economies.

 The US is a member of various international economic

institutions, including the World Trade Organization (WTO),
International Monetary Fund (IMF), and World Bank.

 The US has a significant trade deficit, importing more goods and

services than it exports.
The US promotes free trade but also imposes tariffs on
certain imported goods to protect domestic industries.

The US attracts foreign direct investment (FDI) from

multinational corporations due to its size and market
potential.
 FINAL ASSESSMENT

11-20. Evaluate the role of the United States in shaping

international economic institutions and frameworks, such as the
International Monetary Fund (IMF) and the World Bank. How
has the U.S. influenced the decision-making processes,
policies, and priorities of these institutions?

21-30. Analyze the concept of comparative advantage and

explain how it relates to international trade. How does a
country's ability to produce a good at a lower opportunity cost
compared to other countries impact its trade patterns?
 REFERENCES

"BLS Information". Glossary. U.S. Bureau of Labor Statistics Division of

Information Services. February 28, 2008. Retrieved 2009-05-05.
Maneschi, Andrea (1998). Comparative Advantage in International Trade: A
Historical Perspective. Cheltenham: Elgar. p. 1.
"The Theory of Comparative Advantage: Overview". Flat World Knowledge.
Archived from the original on 1 January 2019. Retrieved 23 February 2015.
Schumacher, Reinhard (2012). Free Trade and Absolute and Comparative
Advantage: A Critical Comparison of Two Major Theories of International Trade.
Universitätsverlag Potsdam. pp. 51–52. ISBN 9783869561950. Neoclassical and
modern theories maintain the difference between domestic and international
trade. They retain the assumption that both labour and capital do not move
internationally.
Jagdish N. Bhagwati, Arvind Panagariya, and T. N. Srinivasan, 1998, 2nd ed.
Lectures on International Trade, ch. 18 & 19, pp. 265-79.
Giovanni Facchini and Gerald Willmann, 2001. "Pareto Gains from Trade,"
Economia Politica, pp. 207-216. 1999 preprint version.
Murray C. Kemp, 1995. The Gains from Trade and the Gains From Aid:
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Paul R. Krugman, 1987. "Is Free Trade Passé?" Journal of Economic
Perspectives, 1(2), pp. 131-144. doi:10.1257/jep.1.2.131
Joy Mazumdar, 1996. "Do Static Gains from Trade Lead to Medium-Run
Growth?" Journal of Political Economy, 104(6), 1996, pp. 1328-1337.
JSTOR 2138942
Dr, Mrs. Mangla P. Jahgle, Dr. Mrs. Madhura Joshi, Mrs. Sumati V. Shinde,
"International Economics",ed 2008, ch 5, pp 122–125
M.L Jhingan,"International Economics",ed 2008,ch 16,pp 155
K.K. Dewett, "Modern Economic Theory",2008,ch 55,pp 671–672