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The Politics of Trade

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Political Science
POLI 243
Mark Brawley

The Politics of Trade: From International Relations to International Political Economy 4/3/12 11:00 PM Think about comparing levels of analysis: different arguments, systems, policy options, information required • US relations with Iraq • American-Chinese relations 40 years from now The Logic Behind Trade • Why do we worry about trade in the first place? • Themes: Economics tells us trade is really good. • Comparative Advantage o Adam Smith: The Wealth of Nations o An actor’s ability to produce a good or service more efficiently than another actor’s ability to do so o the conclusion: specialization A Simple Example of Comparative Advantage • In isolation, Country A can: o Produce a maximum of either § 300 units of textiles § 150 units of wine o The price of goods prior to trade § 2 units of textiles = 1 unit of wine • In isolation, Country B can: o Produce a maximum of either § 80 units of textiles § 240 units of wine o The Price of goods prior to trade § 1 unit of textiles= 3 units of wine • Key idea: who is the most efficient at producing certain goods The Gains from Trade • Compare the domestic prices: o In country A, 1 unit of wine costs 2 units of textiles o IN country B, 1 unit of wine costs 1/3 unit of textile
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