The changing direction of U.S. exports toward rapidly emerging markets and the potential for export growth there are reflected in this section, which analyzes specific countries as current and future export markets. The underlying reason for this historic shift in trade patterns is the explosive economic growth in Asia over the past three decades. Long the world's leader in terms of population-more people live in Asia than on the remaining six continents combined-it is now the fastest growing economic region, creating significant markets for U.S. goods. At the same time, the participation of a growing number of Asian nations in world trade has given rise to a dynamic new class of competitors for U.S. exporters.
An equally important trend in shifting trade patterns-at least until the recent devaluation of the peso-has been the expansion of the Mexican market for U.S. goods. U.S. exports to Mexico have increased dramatically over the past 10 years, such that in 1992 Mexico became the second-largest market for U.S. manufactured goods, and Japan dropped to the number three position. (Japan remains the second-largest market for total U.S. goods exports due to the large amount of agricultural products and raw materials that are shipped to that country.)
The value of U.S. manufactured goods exported to Mexico quadrupled between 1983 and 1993, doubling the share of U.S. manufactured exports to Mexico to nearly 9 percent (Table 1). During the same period, the share of U.S. manufactured exports to the developing economies in Asia increased to nearly 18 percent. Meanwhile, the share of U.S. exports headed for Europe fell slightly and the share destined for Japan and Canada held constant. Despite the regional shift, the United States'principat trading partners have remained all but unchanged from 1983 to 1993: Canada, Japan, Mexico, the UK, and Germany.
| Item | 1983 | 1988 | 1993 |
|---|---|---|---|
| Canada | 21.1 | 22.2 | 21.6 |
| Japan | 10.6 | 11.7 | 10.3 |
| Mexico | 4.4 | 6.4 | 8.9 |
| Western Europe | 27.3 | 27.3 | 24.4 |
| Asia* | 13.7 | 15.8 | 17.6 |
| Western Hemisphere** | 8.1 | 7.2 | 7.9 |
| Other | 14.8 | 9.4 | 9.3 |
| Total | 100.0 | 100.0 | 100.0 |
In 1994, Asia, including Japan, produced nearly one-third of total world output, up from less than one-quarter 15 years ago (Table 2). In contrast, the relative size of the output of North America (Canada, the United States, and Mexico) has remained at around one-quarter of world output. Meanwhile, Asian international trade has taken off (Figure 1--90K). In 1980 the region, including Japan, accounted for nearly 16 percent of world exports. In the next 15 years, the region increased its share to almost 26 percent. The United States and Canada expanded their combined share slightly, from 15.1 percent to 15.5 percent.
A rough estimate of the value of each regior's output in 1994 puts the value of Asia's output of goods and services at just under $8.6 trillion. The United States was producing around $6.6 trillion and Western Europe, about the same. Within Asia, Japan and China are the economic giants. Japan accounts for 8 to 9 percent of world output. The value of this output in 1994 was around $2.5 trillion. For China, the use of purchasing power parity (PPP) exchange rates, which equate the cost of a "basket" of goods and services across countries, results in estimates that place the value of that country's output nearly equal to that of Japan.
Of the 18 economies discussed in the following chapters, more than half are Big Emerging Markets (BEMs), many of them in East and South Asia. These burgeoning markets represent the biggest U.S. export markets of the future. Nine of the BEMs are discussed in detail in this publication, including: Argentina, Brazil, China, Hong Kong, India, Indonesia, Mexico, South Africa, and Taiwan.
| MEASURING THE WORLD'S OUTPUT |
|---|
| The measurement of a country's output, always a difficult task, pales in comparison to the problems encountered in measuring output across countries.
The task requires a measure of relative prices. Unfortunately, exchange rates,
while theoretically reflecting relative prices in the long run, typically fluctuate in
the near term in response to world economic conditions such as interest rates.
To get around this problem, economists created Purchasing Power Parity (PPP)
exchange rates that attempt to equate the actual cost of a 'basket" of goods
and services across countries. This represents an improvement, but still results
in only a rough estimate of comparative output numbers.
GDP estimates using PPP exchange rates are higher than estimates calculated with market exchange rates for most developing countries because of their low prices of nontraded goods and services. On the other hand, the PPP exchange rate estimates of GDP are lower for some countries, including Japan, where many nontraded goods (such as housing) and services are very high-priced when valued at market exchange rates. |
Major industrial areas-the EU, Canada, and Japan which represent the United States' traditional markets-are also analyzed. So is Russia, as an example of an economy in transition. While Russia is a relatively small market for U.S. exports today, it could constitute an important one in the future once it completes its transition to a free-market economy.
