European Integration in a Global Economy
Show Less

European Integration in a Global Economy

CESEE and the Impact of China and Russia

Edited by Ewald Nowotny, Peter Mooslechner and Doris Ritzberger-Grünwald

The expert contributors focus on global imbalances and accompanying policy challenges, competitiveness and trade, the sustainability of current growth strategies, and banking and financial stability in the light of the global economic and financial crisis. They provide a multi-disciplinary assessment, combining the views of high-ranking central bankers, policymakers, commercial bankers and academics, and demonstrate that a broad view of European economic integration is crucial given that spillovers and contagion were major issues of the recent economic crisis.
Buy Book in Print
Show Summary Details

Chapter 6: Oil exporters’ contribution to global imbalances

Iikka Korhonen

Extract

In this chapter I shall briefly review oil-exporting countries’ contribution to the accumulation of global imbalances and their possible role in unwinding such imbalances. The ‘recycling’ of petrodollars from the oil producing countries back to Western banks and onward, for example to Latin American countries, was discussed widely during the first and second oil crises in the 1970s and 1980s. The real value of world fuel exports reached its peak in 1979 and 1980 before declining drastically during the mid-1980s. However, more recently the real value of fuel exports exceeded its previous peak as early as 2005 as the volume of fuel exports grew and the price of crude oil continuously increased between 2000 and 2008 (see also IMF, 2006). Moreover, prices of many raw materials follow the price of oil relatively closely, which can reinforce the effects of oil price on global imbalances. Figure 6.1 shows the evolution of current account balances in the world’s major economic areas in nominal US dollars. We can see that in nominal terms global imbalances remained relatively stable up until the beginning of the 2000s, when they started to increase. On the surplus countries’ side, China has received a great deal of attention in the media and policy debates, but in fact OPEC together with other major oil exporters (Russia, Norway and Kazakhstan) have had larger combined current account surpluses than China. As is well known, Japan, Germany and the newly industrialized countries of Asia have also had relatively large current account surpluses. In the case of Japan the surpluses (even in nominal terms) have been quite high since the mid-1980s, whereas for Germany the large current account surpluses did not emerge until the mid-2000s. For Germany the economic reforms of the early 2000s, especially in the labour market and wage setting, have often been credited with sparking off the country’s tremendous export growth.

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.


Further information

or login to access all content.