Submitted by: Submitted by kingalex1
Views: 341
Words: 2745
Pages: 11
Category: Business and Industry
Date Submitted: 04/25/2012 05:14 PM
1/23
- Oil prices are inputs to production as well as cost
o Volatile
o Commodity
• All commodity prices are volatile
• When prices change Qdemand is very steep
• A large change in price does not change Qsupply
• Change in supply will show more in price and less in quantity
• Small change in supply curve has exaggerated effects on prices
• Doesn’t take much of supply change to change price
o Nigeria
o World GDP will be slower because of oil prices
• Demand for oil in OECD is low
• Booming demand in China, India, Brazil
o GDP
• US 25%
• Conservative number 10%- world bank
- International trade
o Low income used to export agriculture products
o Now export commodities
o Many countries that are poor “aren’t in the world economy”
• Korea used to be poor but then they became a part of the world economy
o Consumer intermediate
o World trade and services
• Business
• Transportation (goods and people moved around the world)
• Consulting, royalty fees, licensing fees, insurance
o Lloyds- partnership
o Most stuff bought on a world economy is because they do it better or its cheaper
• Personal
• Education
• High income countries own the trade and services
• Low – middle income countries do tourism
• Goods and services
• Capital flow
o FDI (green field &/ or M &A)
• Foreign direct investment
• Money that crosses borders in order to purchase assets for production
• World economy - $1 trillion
• Portfolio capital
o Difficult to track
• Middle income countries (25%)
• High income gets majority
• Ex China gets $80 billion in FDI
o Not that much to us
o Trends in the world economy
• Slow pace right now
• Problems?
• Internal stability
o Then you can manage economic growth
• Low income- 8-10%
• Middle income – 6-8%
• High income 4-5%
o This is not what the world is doing table 1.5
o Economic problems with no solution to pull the poor out
• International trade helps but still need good manage
- History matters...