International Trade

The world is shrinking rapidly with the advent of faster communication, transportation, and financial flows. Products developed in one country, such as Gucci purses, Sony electronics, McDonald's hamburgers, Japanese sushi, and German BMWs, have found enthusiastic acceptance in other countries. It would not be surprising to hear about a German businessperson wearing an Italian suit meeting an English friend at a Japanese restaurant who later returns home to drink Russian vodka and watch Dancing with the Stars on TV. International trade has boomed over the past three decades. Since 1990, the number of multinational corporations in the world has grown from 30,000 to more than 63,000. Some of these multinationals are true giants. In fact, of the largest 150 "economies" in the world, only 81 are countries. The remaining 69 are multinational corporations. Walmart, the world's largest company, has annual revenues greater than the GDP of all but the world's 21 largest countries. Between 2000 and 2008, total world trade grew more than 7 percent per year, easily outstripping GDP output, which was about 3 percent. Despite a dip in world trade caused by the recent worldwide recession, the world trade in products and services last year was valued at more than $12 trillion, about 17 percent of GDP worldwide. Many United States companies have long been successful at international marketing: McDonald's, Coca-Cola, Starbucks, GE, IBM, Colgate, Caterpillar, Boeing, and dozens of other American firms have made the world their market. In the United States, names such as Sony, Toyota, Nestlé, IKEA, Canon, and Nokia have become household words. Other products and services that appear to be American are, in fact, produced or owned by foreign companies.