Paper 1 Theme 2 — Understanding the International Economy

H2History(Paper1)Theme2:UnderstandingtheInternationalEconomy EVIDENCEArgument World US WesternEurope Japan DevelopingWorld IMF/IBRD OPEC SecondWorldIndicatorsGDP 1950s●5%1974-80●2.8% 1948-52:MarshallRecipients●15-25%(GNP)1950s-60s:France●5% 1945-73●10% 1979:Argentina●10%,despiteoilcrisis1978-81:Mexico●8%,despiteoilcrisis1980s●Predictedstagnationto10%declineinpercapitaGDPforSub-SaharanAfrica1982:Argentina●–4.2%1983:Venezuela●–3.8%1981-2000:Argentina●–0.6%,downfrom2.6%intheprecedingtwodecades1981-2000:Brazil●0.1%,downfrom4.6%intheprecedingtwodecades1981-2000:Mexico●0.1%,downfrom8%from1978-81 1950s●6%1970s●2.4% Exports 1948-68●Volumeofmerchandiseexportsinnon-communistcountriesgrewby290%1950s●6%1960s●8%1973-79●4.5%1980s●1.5% 1948-55●Intra-Europeanexportsdoubled1958-69●TradebetweenEECcountriesquadrupled1950s-60s●Europe’sexportstoAmericagrewby8-9%annually1960s●Volkswagensbecameleadexports 1970s●HondasandNissansbecameleadexports

Argument World US WesternEurope Japan DevelopingWorld IMF/IBRD OPEC SecondWorldInternationaltrade 1973-75●–13%overall1982●–2.2%Industrialoutput 1950-57:Germany●Industrialproductiondoubled Mid-1950s●Productionmatchedpre-warlevelsProductivity 1960-75●2.7% 1960-75●5-6%1973-92●2.3% 1960-75●10% BOP/BOT 1961●Moreforeign-heldUSDthanavailableUSgoldstock 1970●Firsttradedeficitsince18931971●$2.7bntradedeficit1992●Tradedeficitreturnedto0,withaBOPsurplus 1967:Britain●UK’sBOPproblemsabandonedtheirstatusasareservecurrency 1973●$12bndeficit1978●$36bndeficit 1974-80●OPECmembersdepositedover$150bninoilearningsintocommercialbanks Inflation 1971●6%1973●10%1974●>15%1973-79●12% 1982●4% Unemployment 1975-90●>10%acrossindustrialcountries 1982●10.6%,withautomobileunemploymentat23.2%andsteelat29.2% 1974-75●7mincreaseinunemploymentOilprices 1970●Oilaccountedfor60%ofWesternEurope’senergyconsumption1955-71●$2Dec1973●OPECcutoilsupplyandimposedembargoesagainsttheWestuntilIsraelevacuatedterritoriesgained

Argument World US WesternEurope Japan DevelopingWorld IMF/IBRD OPEC SecondWorldinthe1967Arab-IsraeliWar●$12(+130%)1980●1979IranianRevolutionledtoplummetingoilsupply●$40(+300%)Bankreturnsonequity 1988:Britain,US,Canada●30% PoliciesForeignaid/loans 1948-52:MarshallPlan●$13bntoEurope1940s-50s●$2.3bntoJapan1972●Contributed30%ofworldwidedevelopmentalaid1979●0.2%oftheirGDP1982:Volcker●$3.5bntoMexico1985BakerPlan1989BradyPlan 1972●15EUmembersoftheDACcontributedover50%ofallworldwidedevelopmentalaid1979:France,Germany,Britain●0.5%oftheirGDP 1965●$800mtoSouthKoreaand$150mtoTaiwan1973●$5.8bn1974●4thlargestdonorintheDevelopmentAssistanceCommittee 1945-52●$250mtoFrance,$500mtoEurope1982●$3.8bntoMexico1983-84●$9bnto11mostheavilyindebtedLatAmcountries Defenceaid 1949:MutualDefenceAssistanceProgramme●$1.4bn,then$5.2bnaftertheKoreanWar1951:US-JapanTreatyofMutualCooperationandSecurityExportabsoption 1952●Europeanexportsconstituted50%ofUSimports1958:USTradeAct●30%ofJapaneseexportswereabsorbedbytheUS1950s-60s●Europe’sexportstoAmericagrewby8-9%annuallyEconomicplanning 1946Monne