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Global Value Chains in a Postcrisis World
outcome in the northern economies with that in two key southern economies, the Asian Driver economies of China and India. Structural Crisis in the North High rates of global economic growth during the 1990s and the first decade of the new century were essentially fueled by high rates of consumption in key northern economies, particularly in the large economies of the United States, the United Kingdom, and Spain, as well as in some smaller economies, such as Ireland, Greece, and Iceland. In each case, this consumption boom was made possible through a series of financial bubbles, particularly in housing, which allowed consumers to drawn on the “wealth” arising from inflating house prices. This resulted in two sets of related phenomena—falling rates of household and personal savings (in some cases, falling into dissavings) and a rise in balance of payments deficits. These deficits in external payments were filled by large payment surpluses in key exporting economies, particularly China, Japan, and Germany, made possible by restrained personal consumption arising from high rates of personal—and in recent years, corporate—savings, or low rates of consumption, or both. Table 4.3 shows the extent of external payments deficits and surpluses in key large trading economies. The two most notable cases are the largest deficit economy, the United States (its payments deficit hovered around 5 percent of GDP) and China (whose payments surplus in 2008 was 11 percent of GDP). Also notable is the case of Spain (deficit of almost 10 percent of GDP in 2008) and the United Kingdom (a deficit of almost 3 percent of GDP). Some of the other smaller OECD economies showed even greater trade deficits, notably Greece (15 percent of GDP) and Iceland (40 percent of GDP in 2008). A significant feature of this performance was the growth in these structural imbalances during the 2000s.
Table 4.3 Country Current Account Balance percentage of country GDP Year
Brazil
India
China
Germany
Japan
Spain
United Kingdom
United States
1985 1990 2000 2005 2008
–0.1 –0.8 –3.8 1.6 –1.7
–1.8 –2.2 –1.0 –1.0 –1.0
–3.7 3.4 1.7 7.2 11.0
2.5 2.8 –1.7 5.1 6.7
3.8 1.5 2.6 3.6 3.2
1.6 –3.5 –4.0 –7.4 –9.6
0.7 –3.9 –2.7 –2.6 –2.8
–3.0 –1.4 –4.3 –5.9 –4.7
Source: Organisation for Economic Co-operation and Development database, November 2009.