TRENDS IN FOREIGN TRADE

An economy that engages in international trade-is called an open economy. A usefu.l measure of open-ness is the ratio of a country’s exports or imports’ to its GDP. Figure 29-1 shows the trend in the shares of imports and exports for the United States over the last half-century. It shows the large export surplus in the early years after World War II as America financed the reconstruction of Europe. But the share of imports and exports was low in the 1950s and 196Os.With growth abroad and a lowering of trade barriers, the share of trade grew steadily and reached an average of 13 percent of GDP by the turn of the century. . You might be surprised to learn that the United States is a relatively self-sufficient economy.

Figure 29-2o the next page shows the trade proportions of selected countries. Small countries and those in highly integrated regions like Western Europe are more.open than the United States. Moreover, the degree of openness is much higher in many U.S. industries than in the overall economy. particularly in manufacturing industries like steel, textiles. consumer electronics, and autos, Some industries, such as education and health care, are largely insulated from foreign trade.

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