> Turbulo at aol.com wrote:
>
>> On a purely impressionistic basis one would think that American power
>> has declined from its post-war zenith relative to Europe, Japan and
>> the newer Asian economies. It may be helpful to look at the US share
>> in world production from 1945 to the present. Does Doug or anyone
>> else have stats on this?
>
>
> That's an old, old story, completely inappropriate to an analysis of a
> "new" imperialism.
>
> According to World Bank stats, the U.S. was 39% of world GDP in 1960.
> That fell to 25% in 1980, and then rose to about 32% in 2002. (I'm a
> little behind on updating this spreadsheet.) Some of this is exchange
> rate effects, but in any case, the bulk of the decline happened by 1980.
>
> The composition of the remaining share hasn't changed all that
> dramatically. The "middle income" countries - those with per capita
> incomes like Mexico or Brazil - were around 18% of world GDP in the
> 1970s, and are 16% today. The low-income countries were 5% of world
> GDP in the late 1960s, and are 3-4% today. The "developing" countries
> of East Asia and the Pacific (basically Asia excluding Japan) were 6%
> in 1960, and are around 6% today. Latin America, 6% vs. 5%. The whole
> of the OECD was 74%, and is now 78%. OECD ex-US, 35% then, 46% now.
> Lots of that increase came from Japan, which was 3% in 1960 and was
> 12% in 2002 (which is down from 18% in the mid-90s). The OECD less US
> & Japan was 32% in 1960, and 33% in 2002. So, most of the U.S. decline
> happened quite a while ago, and the rest of the picture hasn't changed
> all that much.
>
> By the way, I'm using the World Bank's version of market exchange
> rates (which averages several years rates to smooth out short-term
> volatility) for this measure rather than PPP because I think PPP is an
> appropriate technique for measuring domestic living standards and
> market rates more appropriate for measuring countries' relative
> economic weights in the world.
If you want to construct a story about relative US decline, it wouldn't hinge so literally on world GDP shares. W. Europe's share of world GDP didn't change much between 1990 and 2000 but its collective power increased a lot because of EU integration. I'm no expert on competition policy, but I doubt any European in 1985 would have been able to block a GE/Honeywell merger, but they did in 2001. Europe's collective voting weight at the IMF/WB hasn't changed at all in the last 20 years, but most people would agree it would be much less surprising to see them use their veto power on some major issue nowadays than in 1985, when such a move would have been totally unthinkable. Despite China's lightning growth, its share of world GDP is still pretty small - yet no one doubts its T-bill portfolio is a significant unspoken factor in US-China relations these days. (Exactly how significant can be debated.) Also, I think US policymakers probably do think a little harder about making any move that could lead to a nasty downward spiral in US-China relations given the huge direct investments there. I just read an interesting empirical paper by Ed Wolff on industrial leadership. From 1970-1993, out of 5 "hi-tech" industries as measured by OECD (R&D share of sales at least 1.5 times the avg industry), the US had the lead (highest production share relative to world GDP share) in only one: Aircraft - where the US lead was huge. Of course, since 1993 the story has completely changed because of Airbus. One could go on....
Seth