14.

Major and emerging world economies

I. Introduction to the topic

Multipolar world
A global power shift is taking place from a unipolar world to a multipolar one as other
emerging countries like Russia, China and even India are stepping forward to take a bigger
leadership role on the world stage that the United States has so far dominated.

The BRIC markets
There is a group of four countries within the emerging markets called the BRIC markets (Brazil,
Russia, India, China), which are the largest of the emerging markets. The BRIC countries are
characterised by favourable population trends (43% of the worlds population lives in these four
countries), plentiful natural resources (Russia is home to over 20% of the worlds estimated
crude oil reserves), and a cheap, well-educated labour force (India produces 5 million university
graduates per year).

Chinas growth
China has become a global power, contributing more to global growth in 2007 than the United
States, the first time another country has done so since at least the 1930s. China has also become
the worlds largest consumer, eclipsing the US in four of the five basic food, energy and
industrial commodities. China has also surpassed the US to become the worlds largest emitter
of CO2.
The 21
st
-century heavyweights
The world economy is increasingly powered by countries such as China and India whose growth
is far more energy- and commodity-intensive than that of rich countries. Since 2001, China has
accounted for about half of the increase in the world's demand for metals and almost two-fifths
of the increase in oil demand.
The prices of many raw materials have surged in the past 12 months. The Economist's dollar-
based commodity-price index is up by 26% from a year ago. The food index is up by almost
50%. The price of oil has risen almost 80%. These jumps are the main cause of higher inflation
across the globe. They are also related, at least partially, to structural changes in the global
economy.
This shift means that the usual relationship between the USA 's business cycle and commodity
prices may change. Past American recessions have sent the prices of oil and other resources
down. That may no longer be so as emerging economies become more resilient to an American
recession than formerly.












Vocabulary exercises based on the introductory text


A. Match each word or phrase in the left-hand column with one similar in meaning
from the list opposite

1. taking place a. happening
2. unipolar b. was the cause of
3. multipolar c. outdoing
4. stepping forward d. having one centre of power
5. eclipsing e. advancing
6. surpassed f. connected
7. accounted for g. able to recover quickly from a setback
8. surged h. exceeded
9. related i. having more than one centre of power
10. resilient j. risen sharply


B. For each phrase in the list below, find in the text a word or phrase given in bold that is similar in
meaning

1. a change in position .
2. had control over .
3. roughly calculated .
4. people who have obtained a university degree .
5. more and more all the time .
6. substances used to make a product (two words) .
7. sudden rises .
8. not completely .
9. periods of reduced business activity .
10. developing .









II. Hungarian text

Exercise 1.
Cover the English words and expressions given on the right and try to guess the English equivalents of
the underlined parts of the Hungarian text.

Exercise 2
After checking your guesses against the equivalents listed on the right, give an oral summary of the text in
English.

Elhasal a zldhas
1
?

Figyel 2006. oktber

Jelenleg egy vratlan s fktelen dollrgyengls
2
a legnagyobb veszly
3
a vilggazdasg
szmra lltja a Nemzetkzi Valutaalap (IMF)
4
legfrissebb elemzse
5
. A nemzetkzi szervezet
szerint a befektetk
6
abban a remnyben veszik az amerikai llampaprokat
7
, hogy a zldhas
rfolyama a fbb devizkkal szemben nem esik ltvnyosan
8
a kzeljvben, m a duzzad
amerikai klkereskedelmi hiny
9
ezt egyre inkbb megkrdjelezi.

Alacsony a valsznsge
10
ugyan, de roppant kockzatokkal jrna a vilg pnzgyi
rendszereire az a forgatknyv, amely szerint a dollr esetleges gyenglse nmagt erst
folyamatt
11
vltozik idzi
12
a Bloomberg az IMF vilggazdasgi stabilitsrl
13
szl
elemzst. Rodrigo De Rato, az IMF gyvezet igazgatja
14
egy mlt heti nyilatkozatban
15

ugyancsak a labilis kereskedelmi mrlegeket
16
, a protekcionista gazdasgpolitika trnyerst
17
,
valamint a magas energiarakat sorolta a vilggazdasgra leselked legnagyobb veszlyek kz
18
.

Kedden kzztett statisztikk szerint
19
jliusban az amerikai klkereskedelem hinya rekord
szintet, 68 millird dollrt rt el
20
, s ezzel valsznleg minden idk legnagyobb deficitje
21
jn

1
greenback
2
unexpected and unbridled weakening of the dollar
3
the biggest threat
4
International Monetary Fund
5
latest analysis
6
investors
7
government securitites
8
exchange rate wont fall dramatically
9
foreign trade deficit
10
it is not very likely
11
self-reinforcing process
12
cites
13
stability of the world economy
14
managing director
15
statement
16
unstable trade balance
17
increasing prevalence of protectionist economic policy
18
listed among
19
according to statistics published
20
hit a new high
ssze az idei harmadik negyedvben
22
. A hiny jelents rszt a drga olaj mellett a Knval
szembeni deficit okozza
23
. Nem vletlen, hogy az amerikai gazdasgpolitika minden
rendelkezsre ll eszkzzel
24
prblja elrni, hogy Kna adjon lehetsget Washington szerint
tlrtkelt fizeteszkze
25
, a jan ersdsre. Ha ez bekvetkezne, az amerikai kls
egyensly is kevsb lenne riaszt. A helyzet ugyanakkor nem kifejezetten ebbe az irnyba
mutat
26
. Pekingben kzztett statisztikk szerint augusztusban immr negyedik hnapja
egyfolytban rekord magassgba szkik a knai kereskedelmi tbblet
27
.

Az IMF szerint a devizarfolyamokra a kzeljvben
28
mg a jelenleg tapasztaltnl
29
is nagyobb
volatilits
30
lehet jellemz. Ez elssorban a drga olajnak, s az ebbl ered inflcis
nyomsnak
31
, valamint az amerikai gazdasg lassulsnak tudhat be
32
.
1988 n






















21
highest deficit ever
22
quarter
23
a significant proportion of the deficit is caused by
24
by every means available
25
overvalued currency
26
doesnt point in this direction
27
trade surplus
28
in the near future
29
currently experienced
30
volatility
31
inflationary pressure arising from this
32
can be put down to the slowdown








III. English text

A more competitive dollar is good for America
Martin Feldstein
Financial Times, 15 October 2007

1. The dollars recent decline is just a prelude to the more substantial fall needed to shrink the
US current account deficit, running at a nearly $800bn (563bn) annual rate, about 6 per cent of
gross domestic product.
2. If the dollar remained at its current level, the US trade deficit would continue to expand
because Americans respond to rising incomes by increasing imports more rapidly than foreign
buyers raise their imports from the US. Although a faster growth rate in the rest of the world
would raise US exports and reduce the US trade deficit, experience shows that even substantially
faster foreign growth would have only a very small impact. A lower dollar has to do most of the
work of reducing the global trade imbalance.
3. America's trade deficit must be financed by a capital inflow from the rest of the world. Since
foreign investors are no longer buying significant amounts of US stocks or direct investments in
US businesses, the vast bulk of that capital inflow must take the form of purchases of US bonds.
4. The largest purchasers of this debt are foreign governments and their related investment
funds. A big uncertainty hanging over the dollar is how long those governments will be willing to
keep adding to their dollar holdings, knowing that they will eventually incur losses as the dollar
falls.
5. The falling dollar should not be seen as a problem for the US economy. A more competitive
dollar will raise net exports, reducing the probability that the current weakness will turn into an
outright recession. Looking further ahead, as the US household saving rate rises from its current
low of nearly zero to a more normal level, consumer spending will slow, driving down aggregate
demand. A declining dollar will then help to maintain growth and employment by raising exports
and causing American consumers to shift their spending from imports to domestically produced
goods and services.
1594

Important terms

current account (CA) deficit this exists when a country's total imports of
goods, services and transfers is greater than the country's total
export of goods, services and transfers.

trade deficit a negative balance of trade in which a countrys imports exceeds its
exports (the CA deficit includes the trade deficit plus net income
payments and unilateral transfers)


global trade imbalance a situation in which some countries have a high trade
surplus while others have a high trade deficit

capital inflow money coming into the country

dollar holdings the amount of dollars countries keep in reserve

aggregate consumer demand the total demand for goods and services in an
economy (consumer demand is from people rather than businesses)

Extended vocabulary

prelude to sg: an introductory event preceding another more important event
shrink: reduce or make smaller
the vast bulk of: by far the greatest proportion of
hanging over: overshadowing, casting doubt over
incur (losses): suffer
outright: complete



Comprehension questions


1. Why does the dollar need to fall even further than it has?



2. How big is the USAs CA deficit in dollar terms and in relation to GDP?



3. Why will the US trade deficit continue to grow even if the dollar remains at its present level?



4. In what way would faster economic growth in the rest of the world help reduce the US
deficit? How big would the impact be on the US deficit?


5. How must the USAs trade deficit be financed?



6. What change is noticeable in the behaviour of foreign investors?



7. What form will most of the foreign capital inflow have to take?



8. Who are the largest buyers of US bonds at the moment?



9. What might cause governments to stop buying US bonds?



10. According to the article, in what way is a weak dollar good for the US economy?




IV. Discussion questions

A. Discussion questions related to the text

1. What do you think are some of the deeper causes of the huge US trade deficit?

2. What are some of the positive and negative effects of the CA deficit on the US economy?

3. Do you think that the USAs growing CA deficit is sustainable? Give reasons for your answer.


B. Additional discussion questions

1. What are some of the reasons for the spectacular economic growth of China?

2. Is Chinas economic expansion something the world should be worried about or should it be
seen as an opportunity worth exploiting?

3. What impact would a US recession have on the global economy?


V. Role-playing exercises

27. The ethics of whistleblowing

Student:
Your friend is shocked when he/she finds out that his/her company is illegally disposing of
medical waste in the local landfill. His/her supervisors have told him/her to mind his/her own
business. He/she comes to you for advice: should he/she just forget about it or take it to the
local newspaper?


Examiner:
As the secretary in a small toxic-waste disposal company, youve become aware that your
company is illegally disposing of medical waste in a local landfill. Your supervisors tell you to
forget about it. But youre disturbed about it. You ask a friend for advice about taking your story
to the local newspaper.



28. Making your office more environment-friendly

Student:
You are the office manager in charge of a campaign to make your company more environment-
friendly. Your CEO has asked you to present a list of proposals for environmental improvements
in the office building where you work. What are your proposals?



Examiner:
Your company is concerned about the environment, and is therefore running a campaign to
make your entire office building more environment-friendly. Youve asked your office manager
to come up with some proposals.