Class 94: Discussion of Krugmans Pop Internationalism

1
Class 9/4 Discussion of Krugmans Pop
Internationalism

• Intro. and chapters 1,2, and 8.

2
Core Question

• Nations competing vs. corporations competing.
• Whats wrong with the analogy?

3
Competitiveness

• Measuring competitiveness of a corporation.
• Measuring competitiveness of a nation.
• How about the trade surplus?

4
Laura DAndrea Tysons Definition

• our ability to produce goods and services that
  meet the test of international competition while
  our citizens enjoy a standard of living that is
  both rising and sustainable.

5
Competitiveness vs. Productivity?

• What is the distinction?
• What is the Terms of Trade?
• How is it measured?

6
The US Terms of Trade
7
National Income

• GNP (Gross National Product) or
• GDP (Gross Domestic Product)
• Y C I G X M
• Why X M?
• Nominal GNP vs. Real GNP

8
Terms of Trade and Living Standards

• Prices of what U.S. produces vs. prices of what
  U.S. buys
• Real GNP (how much stuff US produces)
• Command GNP (how much stuff US buys)
• Comparing growth of real and command GNP

9
Bottom Line

• Terms of trade has not changed much
• Recently it has moved favorably for the US
• Its effect on living standards is tiny
• Competiveness is simply productivity
• In a large nation like the US, the rest of the
  world is secondary to the health of the economy