> http://www.latimes.com
> Deepening Fears Batter the Markets
> By Tom Petruno
>
> "If Iraq doesn't go right, it could be really bad" for globalization of
> the economy, including the trend toward greater trade, Malpass said. "I
> think markets are screaming about how interlinked we are" and the new
> risks to those links.
OK. Now here's something interesting about the world of alleged all-conquering ubiquitous globalization: most trade takes place *within* East Asia, Northamerica and the EU, not between them. Here's some data I'm going to add to an essay I'm writing:
Table 9. Trade Exposure by Region (Total Imports Plus Exports, as % GDP, year 2000)
Region Exposure to US Exposure to EU Exposure to EA US --- 3.3% 6.1% EU 4.0% --- 4.9% EA 9.0% 5.4% ---
(EU means Eurozone/continental Europe without the UK, EA means Japan, China, S Korea, Thail, Malaysia, Indon, Sing, HK, Taiw, Vietn but not Australia -- all data calculated from IMF Direction of Trade Statistics).
Kind of amazing. In a nutshell, if the EU wanted to slap a trade embargo on the US, only 4% of EU GDP is at stake -- the size of a medium-level bank bailout. East Asia, though, is still pretty exposed to the US, though less than you might think -- Japan's exposure to the US is only 5.6% of Japanese GDP, and China's exposure is 5.8% of Chinese GDP. It's the entrepots, Korea and Taiwan which can't do without US markets.
> Even if a conflict is settled quickly, economists are concerned about
> foreign investors' willingness to continue funding the huge U.S. trade and
> budget deficits.
Only the EU could pull the current account trigger. In ten years, if current trends continue, East Asia will have enough muscle to do something similar. Another little factoid: the EU trades more with its local semiperiphery (Eastern Europe, Russia, Turkey, Maghreb/Mashreq) than with the US.
-- DRR