SOC 105 Lecture Notes - Lecture 21: Vertical Integration, Horizontal Integration, Alite
Document Summary
Rationales for liberalized trade relations based on comparative advantage. Labor is inefficiently distributed in rural spaces settled by smallholders. Smallholder farms cannot produce food as cheaply as large farms. Rural (agriculture) to urban (industry) wealth redistribution. Cheap grain surpluses feed growing cities and support growing consumer based economies. Equal trade rules exist between unequal countries. There are rules that the global economy abide by but the reality is that the countries are on different economic fields. Before trade liberalization roughly 90% of agricultural revenue goes to small-scale farmers. After trade liberalization these farmers face difficulty competing in global markets. Countries like the us create comparative advantages through direct payment, subsidies, and tariffs. Trade distorting practices allowed under wto rules. Reason for this is because wto believes that any country can provide subsidies to their farmers. 50% reduction could grow collective gdp by billion. In the us, most farmers do not benefit from subsidies.
