POLS1006 Lecture Notes - Lecture 12: International Political Economy, Comparative Advantage, World Trade Organization
18 Jul 2018
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But liberals also have theories for why free trade would break down. If an economy is completely closed, locally scare factors will do well and locally abundant factors will do badly. Therefore, as an economy becomes more open locally scarce factors lose out and locally abundant factors gain. Sector refers to different types of industry. Factors as defined above are inputs into sectors. So(cid:373)e states ha(cid:448)e i(cid:374)dust(cid:396)ies i(cid:374) (cid:449)hi(cid:272)h the(cid:455) do(cid:374)(cid:859)t ha(cid:448)e a (cid:272)o(cid:373)pa(cid:396)ati(cid:448)e ad(cid:448)antage. Yet these industries can be very politically powerful and people who work or invest in them may not be able to transition easily into other industries. Their political representatives should also press for protectionism. Ma(cid:374)(cid:455) a(cid:396)e (cid:858)(cid:272)o(cid:374)ditio(cid:374)al(cid:859) f(cid:396)ee t(cid:396)ade(cid:396)s happy to open their own markets provided other states do so too. But concerns about cheating are widespread cheating meaning benefiting from othe(cid:396) states(cid:859) ope(cid:374)(cid:374)ess (cid:449)ithout ope(cid:374)i(cid:374)g o(cid:374)e(cid:859)s o(cid:449)(cid:374) (cid:373)a(cid:396)kets.
