POLI 205 Lecture Notes - Lecture 14: Autarky, Neomercantilism, Foreign Direct Investment
15 Jun 2018
School
Department
Course
Professor
POLI205
Class November 1st
International Trade and Multinational corporations
Approaches to Trade
1)Economic Liberalism
- Emphasizes free trade
-Believes that government should not intervene in economics except to regulate markets
2)Neomercantilism
-Argues that government should protect domestic jobs and industries through protectionist measures.
-The goal is to maintain balance of trade and balance of payments surpluses.
-states adopt different types of trade strategies in order to maximize their own wealth while minimizing
their dependence on other states.
-Some states have tried a policy of autarky (self-reliance)
-an autarkic state avoids trading altogether and instead tries to produce everything it needs.
-Autarkic states have been characterized by declining relative power.
-E.g. Albania (until 1991), China (1950-60), North Korea
-Many states engage in protectionism , where they protect domestic industries from international
competition.
-States often protect infant industries until they are mature enough to compete on global markets.
-E.G. South Korea protected Hyundai
-States also protect industries that are critical for national security, such as electronics and computer
industries.
-States often protect their domestic industries if market conditions worsen (e.g., The American Auto
Industry during the 1970s)
Protectionist Measures
1) Impose a tariff on imported goods
- International norms favour tariffs as a protectionist measure, because they are transparent.
Non-Tariffs Barriers:
2) Quotas on imports.
3) Subsidizing a domestic industry.
4) Restrictions and regulations making it difficult to distribute and market an imported product.
find more resources at oneclass.com
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Document Summary
Believes that government should not intervene in economics except to regulate markets. Argues that government should protect domestic jobs and industries through protectionist measures. The goal is to maintain balance of trade and balance of payments surpluses. States adopt different types of trade strategies in order to maximize their own wealth while minimizing their dependence on other states. Some states have tried a policy of autarky (self-reliance) An autarkic state avoids trading altogether and instead tries to produce everything it needs. Autarkic states have been characterized by declining relative power. Many states engage in protectionism , where they protect domestic industries from international competition. States often protect infant industries until they are mature enough to compete on global markets. States also protect industries that are critical for national security, such as electronics and computer industries. States often protect their domestic industries if market conditions worsen (e. g. , the american auto. Protectionist measures: impose a tariff on imported goods.
