10. Report August of 2009: On Spain, the United States, Trade Deficits and top Current Account Balances. Euro-American Association of Economic Development Studies

Graph 2: Current Account Balance per capita in top 18 countries with highest balance deficits
Source: Euro-American Asoc of Eco. Dev. Studies, elaborated from international sources. Development Report August 2009.

The order of the countries in graph 2 is the same of graph 1 (see list below).

Graph 1: Top Current Account Balances of the World (Bn dollars: thousand millions in 2008): 18 countries with highest superavit and 18 countries with highest deficits.
Source: Euro-American Asoc of Eco. Dev. Studies from international sources. Devalopment Report August 2009 http://euroamericanassociation.blogspot.com/Source: Euro-American Asoc of Eco. Dev. Studies from international sources. Devalopment Report August 2009 http://euroamericanassociation.blogspot.com/
Comments to Graph 2. The higher deficits per inhabitant (Current Account Balance per capita below -3000 dollars per inhabitant) corresponds to country number 2 (Spain) and number 9 (Greece). The degree of deficit per head is lower than 2000 dollars in a great majority (14 out of 18 top total deficit countries), including the case of the United States. It is much higher in the cases of Spain and Greece, with more than 3000 dollars of deficit per capita, what is a problem, having into account that those countries have a low degree of industrial development and they should foster industry for sustaineable development of other production sectors. Countries by total deficit in graph 2 appear in the same order than the countrydeficit countries of graph 1.

Comments to Graph 1: The 18 highest Current Account Balance Deficits of the World in year 2008 (negative values in red in Graph 1), correspond to: 1. the United States, 2. Spain, 3. the United Kingdom , 4. Italy , 5. France, 6.Turkey, 7. Australia, 8. India, 9. Greece, 10. Poland, 11. Romania, 12. Brazil, 13. Portugal, 14. South Africa, 15. Ukraine, 16. Mexico, 17. Vietnam and 18.  Bulgaria, while the 18 highest Current Account Balance superavits (positive values in blue in Graph 1) in the same year correspond to: 1. China, 2. Germany, 3. Japan, 4. Saudi Arabia, 5. Russia, 6. Norway, 7. Kuwait, 8. Venezuela, 9. the Netherlands, 10. Libya, 11. Switzerland, 12. United Arab Emirates, 13. Algeria, 14. Sweden, 15. Singapore, 16. Iran, 17. Malaysia and 18. Taiwan.

Causes and consequences of deficits and superavits:
Superavit in some cases correspond to oil exports and in other cases to countries interested in diminishing their international debt or interested in investment abroad in order to increase economic returs and development. Superavits are usually good for a country if the returns from this superavits, usually invested abroad, have direct and/or indirect positive effects on domestic economic development as it usually happens.

Balance deficits respond to different types of situations and have different effects on economic development:
1) Countries highly industrialized, which are attractive and open to foreing investment in domestic markets in order to foster Imports capacity and production in some economic sectors. Correspond to this group the United States, the United Kingdom and France. The effect is usually positive. In this cases foreign resources are supplementary of domestic resources and usually positive.
2) Countries of middle level of industrialization, which do not foster enough industrial growth and develop economic policies addressed to increase international debt in order to finance Imports and foster building and services activities. In these cases, such as Spain in the period 2004-2008, and at a less extent before 2004, foreign resources are used ad substitutes of domestic industrialization and have short run positive effects but this police may lead to long run negative effects it is not accompanied by increase in industrialization and good conditions of international debt (low cost, sustainability, stability and other ones).
3) Countries of low level of industrialization: Usually a Current Account Deficit is positive and necessary to foster economic development, based on international cooperation and investment.

The role of Exports, Imports and Current Account Balance:
International Econometric models show that foreign trade is usually positively associated with economic development, partly because Exports foster economic development from the demand side (more purcharsers of the goods and services produced by the country) and partly because Exports increase the capacity to increase Imports of raw materials and other goods which have a highly positive effect from the supply side, allowing the country to expand domestic production, usually both in industrial and non industiral sectors. Although the role of the demand has been widely studied and recognized, the important role of supply has unfortunately received less attention in economic studies and policies. Interesting articles in this regard, free downloadble, are included in our journal IJAEQS Vol. 3-1 for the cases of Europe and North America, and in Vol. 4-1 for Asia, Africa and Latin America (to access click on the selected article and then click on "Download" at the Abstract page).

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9. Latin America 2000-2007: The Role of Investment, Industry and Foreign Trade in economic development. Euro-American Association of Economic Development Studies

     Economic development in Latin America has experienced a positive evolution in the period 2000-2007, althought it could have been higher in case of more industrialization. The low levels of industrial real Value-Added per capita in comparison with OECD countries explains, at a great degree, the lower levels of real income per capita in Latin American countries.

    The following graph shows the relationships between increase of real GDP per capita in the period 2000-2007 and the level of industrial development at the beginning of that period. Of course the increase in industrialización during the period has also a positive impact on the development of services and other sectors, and thus on real GDP per capita.
                     Increase of real GDP per capita and industrialización in Latin America
                         Source: Elaboration by the Euro-American Association from World Bank indicators

 The important role of industry, together with human capital, social capital, foreign trade and other factors is well explained in the figures presented in the article by Guisan(2009), free on line at Volume 9-1 of the journal AEID
Other articles published by our Association of interest for economic development in Latin America are listed
in our Blog of International Economics in Spanish. We will include here a list of those published in English.

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