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36 Cards in this Set
- Front
- Back
Trade is... |
- "theoretically" beneficial - voluntary exchange between producers & consumers - expansion of business - consumers get cheaper goods - each actor concentrates on what they do well - self-sufficient substitutes (swap what they do well) |
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2 Types of Trade Preferences |
1. Stolper-Samuelson 2. Ricardo-Viner |
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What is the "Stolper-Samuelson" Approach? |
* trade preference * - Trade protection benefits the scarce factor of production - Labor-scarce country: 1. labor benefits from protection 2. labor loses from trade liberalization |
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What is the "Ricardo-Viner" Model? |
* trade preference * - Some factors of production tied to their industry ARE SPECIFIC to their industry - Relevant actors are industrial sectors - Based on principle: "factors of production are not mobile" - NOTE EASY for labor or capital to shift uses |
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Ways to Restrict Trade (9) |
1. Tariffs 2. Subsidies 3. Sanctions 4. Health/Safety Bans 5. Ethical Bans 6. Legislative Preference/Local Legis. Preferences 7. Local Legislative Preference 8. Volume Restrictions 9. Prohibitions on Military Tech |
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Hecksher-Ohlin Trade Theory |
* way to boost developing economies * Developing countries: - Rich in unskilled labor? Utilize manufactured goods to boost economy *MUST be in a labor-rich environment ex: Indonesia |
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Comparative Advantage |
- ability of a country or firm to produce a particular good/service more efficiently than other goods/services (in comparison to the efficient production of other economic activities the state may engage in) - its resources are most efficiently employed in this activity - |
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Law of Comparative Advantage |
Produce what you can produce best, given whatever resources are available to you *what you must do to be successful* |
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Open Markets |
Consumers pay less Preferred by consumers Increases competition * Everyone wants more consumers to sell to, but no one wants to open their consumers to other markets. |
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Closed Markets |
Less competition Charge @ producers' discretion Costly to the consumers Preferred by producers |
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Who has the most influence in trade policy? |
Small Groups/Organizations: - small sectors = more likely to have organizational advantage - have focused agenda - WHY? Problem w/ Collective Action: the more people involved = the LESS likely they are to get attention |
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Trends of Trade (3) |
1. Democracy vs. Authoritarian Regime 2. POTUS vs. Congress: - POTUS = more nationalist - Congress = more protectionist 3. Larger States Check Power of Small States ~Labor Unions: - Local Sector: protectionist (balance narrow scope) - National Sector: more nationalist |
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Compensation for Unemployment (2) |
1. Worker Retraining Programs 2. Unemployment Packages |
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True/False: Trade policies in State A may be less dependent on domestic policies & more dependent on foreign states. |
TRUE: Policies may be dependent on other states. Look @ global & economic conditions. |
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PRISONER'S DILEMMA OF MARKETS: 1. State A & State B = BOTH Closed Markets 2. State A = Closed Mark. ; State B = Open Mark. 3. State A = Open Mark. ; State B = Closed Mark. 4. State A & State B = BOTH Open Markets |
Prisoner's Dilemma Market Options: 1. 3rd Best Option 2. State A = Worst Option ; State B = Best Option 3. State A = Best Option ; State B = Worst Option 4. 2nd Best Option * NOT much incentive to defect. |
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Ways to Increase Int'l IPE Cooperation (6) |
1. Diplomatic Channels 2. Interaction b/w BIG & small nations 3. Fewer states involved = easy to get coop. 4. Tying mulitple industries together 5. Spur cooperation for future cooperation 6. ANY global institutions helping facilitate trade * More interaction w/ states = increase trust |
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GATT stands for...? What is GATT? |
General Agreement on Trade & Tariff - 1st move for a Global Trade Initiative - lowered trade barriers - stopped short of liberalization - system of negotiating agreements in hopes it would generate cooperation *KIND OF FAILED - DIDN'T GO FAR ENOUGH |
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WTO stands for...? What is the WTO? |
- replaced GATT - 80% of world trade is regulated by WTO - Increased enforcement mechanisms - Monitors compliance - GOAL: COMPLETE LIBERALIZATION ; open borders of trade - Succeeded where GATT failed (esp. w/ agricul.) - Helps w/ some non-tariff barriers |
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What to Regional Trade Organizations do? |
- Seek to fix things they see wrong with the WTO - Deal w/ narrowed base |
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"What Do Undergrads Need to Know About Trade?" Misconceptions of Trade (5): |
1. Int'l Trade is about Competition 2. Purpose of Trade = Imports 3. Exports = Means to Get Imports Needed 4. Strive for Productivity: high productivity allows for domestic consumption 5. High Revenue from Trade IS NOT Beneficial for Individuals |
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"The Concern for Competitiveness" TRUE/FALSE: It is better to have US-owned companies based internationally w/ foreign workers than to have foreign-owned companies using YOUR workers. |
TRUE: Ultimately what you want is a flourishing American encomony. |
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Poor Countries Tend to Have... (4) |
1. Less material wealth (income, GDP per capita) 2. Migration from rural to urban areas 3. Lack of domestic investment in infrastructure 4. Young or rapidly growing populations |
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What leads to economic inequality? |
1. Gov. Policies 2. Ethnicity, Gender 3. Gov. Builidng Infrastructure 4. Gov. Dynasties 5. Arable Land 6. Oppression by Colonizers |
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The Resource Curse |
- countries rich in natural resources are typically poorer countries, regardless of their success & abundance (exception: Saudi Arabia) - Rich Countries: export maunfactured goods - Poor Countries: export resource-based goods * specialize in what you do well * |
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The Problem w/ Depending on a Produced Good |
1. Country produces something the world wants 2. Country's economy becomes dependent 3. Economy = AT RISK if the demand for the good falls |
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Single Economic Resources & Control |
1. Those who control the economically efficient resources in a state also control the economy. 2. Eliminates competing markets 3. Little willingness to expand 4. Money goes to rich, not the poor ex: South African diamonds |
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Import Substituting Industrialization (ISI) |
- encourage domestic industry -replaces imports - high tariffs & import barriers - state controls foreign exchange & banking |
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Winners from Import Substituting Industrialization (ISI) (4) |
1. Manufacturing Companies 2. Middle-Upper Classes 3. ANY Domestic Industry 4. Urban Areas |
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Losers from Import Substitution Industrialization (ISI) (3) |
1. Consumers 2. Agriculture 3. Foreign Banks & Industries |
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Export Oriented Industrialization (EOI) |
- state-focused good exportation - build domestic industry - make $ by selling - urban workers do poorly |
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Washington Consensus |
policy encouraging capital input removes trade barriers privatizes state-owned industry VERY liberalized banking system lower gov. spending & gov. debt |
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Winners in the Washington Consensus (3) |
1. corporations 2. agricultural exports 3. state-specific industries 4. consumers (** in the long run) |
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Losers in Washington Consensus |
1. Non-competitive industry 2. Consumers (** in the short run) 3. Natioanl business 4. Urban workers |
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State Capitalism |
- free trade controlled by state - state controls manufacturing to exporting - free trade w/ other states - EASILY CORRUPTED * little analysis * |
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Winners of State Capitalism (3) |
1. Gov (ex: Russia & China) 2. Niche Businesses 3. Foreign Traders & Captialists (trade is up) |
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State Capitalism Losers (2) |
1. Workers 2. General Population |