Hi again. Welcome back to Global Business Environment. This is module five. This is the last and fifth part of this module in which we've been asking and answering the question, what are the benefits from trade? If you recall, we started out this module by looking at mercantilism, an idea that really is the forerunner of today's mindset of protectionism, or putting up barriers to trade across borders. And we saw that in the 17 and 1800s, economists such as Ricardo put forth ideas which led to today's idea of freer or more open borders. When we look at mercantilism, if you recall, the idea was that countries wanted to export more than they import. If you watch the news, you may hear criticism, for example, of countries that have a trade deficit. And that really is rooted in, in this older mindset of mercantilism, which is that you don't want imports, you only want exports. Here's a, a map of the world, and the countries that are in red have a trade deficit, and the countries that are in blue have a trade surplus. And in other words, we could say that if you are a country that is highlighted with red, it means you, import more than you export, when you add up the total value of all imports and you add up the total value of all exports. Countries in blue have the opposite case. They export more than they import. It's not clear whether or not from this particular map, whether or not it's better to be one way or the other. Clearly, many of the red countries have very high GDPs per capita. So despite the fact that, for example, in the, that in the United States, it's often criticized that we have an overall trade deficit or we import more than we export, that is not correlated with negative growth, economic growth in the United States. The United States is a wealthy country despite the fact that it imports more than it exports. This is, so it's, it's not clear from this map whether or not mercantilism is wrong or right. But it is the case that there still are remnants of those older ideas. And so that protectionism sometimes leads to the type, or the, the protectionist mindset leads to the protest and the policies that are promoting barriers to trade. And as we look back at the 20th century, there were differing periods of increased barriers, and then, from the 1980s on, the beginning of lowering barriers, for the most part, across the world. Some of that mindset of protectionism, which still lasted into the 20th century and into today, is concentrated in developing or emerging markets. Sometimes it's been viewed that those countries have been hurt by increased trade. And clearly, some parts of society do experience differing benefits from the introduction of trade. For example, if a particular good or service is no longer produced in a society because it's produced in another country and then imported into the to the other country, the people or individuals or companies that made that product previously, clearly are short-term losers. They don't have jobs anymore. They don't have their business, and that is obviously and clearly a very bad thing for those individuals. But overall, you might ask, have there been benefits to trade for the developing and emerging countries across the world. We saw last time, or actually in module three, that the developing countries continue to increase at ever higher rates, their participation in this globalization and freer trade and more open borders movement. We see that since the 1980s, with changed policies and open borders, that the percentage of total world trade that comes from developing economies across the world continues to increase at a rapid rate. So this shows that these countries are able to at least participate. Now, that doesn't necessarily mean that this it's all positive for every individual in that society. Another thing you might ask is, what, what are countries producing? What, what, how do they choose what to specialize in? It's a very complex picture we could paint. In, in our examples, we looked at smartphones and motorcycles, and, and that's obviously not very realistic. In the modern world, it's much more complex. Let's look at one country just to get an idea for the type of specialization that goes on in today's modern world. We're looking at Brazil here, and there's lots of information on this page. I'll scroll down some, but we can see, we're looking here at the top that Brazil exports many products, including iron ore, crude petroleum, soybeans, raw sugar, and poultry and meat. It imports refined petroleum, crude petroleum, which it also exports, cars, vehicle parts, and petroleum gas. It exports all around the world, including to China, the United States, European nations such as the Netherlands and Germany and it, its neighbor Argentina. It imports from many of those same countries, so you're seeing kind of a complex picture start to develop. As we scroll down, we see even more information. We see that, that Brazil is also an important exporter of coffee, corn, airplanes, so it's not just one product. It's not just petroleum or agricultural products, it's, it's advanced goods such as airplanes that it, that it exports. You can see that it imports its vehicles, but they also make vehicles there. They export crude petroleum and they import it. And so today's economies are very complex societies and economies that have very complex interests that put forth ideas related to protectionism. For example, in some parts of society, entities like companies, or trade unions or labor unions, will lobby their governments for protection from trade so that they do not have to lose their jobs. And certainly, anyone can sympathize with their interest in doing that. But in doing so, the benefits from trade are not gained. All of society does not benefit. My final example on that is is a very personal one. If you live in the United States, you know that most soft drinks or sodas are made with what's called high fructose corn syrup. And that's a sweetener that's an alternative to sugar. And the reason that, in the United States, most of our soda products, or soft drinks such as Coca-Cola, are made with corn syrup instead of sugar has to do with these ideas related to protectionism and blocking trade. In the United States, there are some sugar producers who are unable to compete with imported sugar, and they have convinced the government to protect or put tariffs on imported sugar, making it expensive relative to what it would be if those tariffs weren't there, saving the jobs of local, in the United States, producers of sugar. But those producers can't make in sufficient quantities and can't make it inexpensively enough to be utilized in products such as Coca-Cola. Therefore, in the United States, we drink soda pop or soft drinks which aren't quite as good-tasting as they ought to be. We know that because when we travel to other countries, we drink soft drinks such as Coca-Cola with pure cane sugar rather than corn syrup. And we enjoy it much more, it tastes a lot better. And so, that being the case, there is a very vibrant business in the United States for importing what we call Mexican Coke, which is Coca-Cola bottled and made in Mexico with pure cane sugar, and it's imported and it's more expensive than locally produced, in the United States Coca-Cola, but it tastes better and so people are willing to pay for it. And you can buy it at many stores all across the United States, showing that there's a clear preference for for soda, soft drinks with sugar rather than corn syrup. But citizens, or consumers, in the United States are unable to purchase and consume sugar at the rates that they might, the prices and the quantities, if certain parts of society weren't protecting, or weren't protected from foreign competition or imports of sugar. So that's a final example, just to give you an idea of how complex the world market is today with imports and exports and global trade. This has been module five. This has been the last part in which we've looked at the question, what are the benefits from trade? Thank you.
