IPE continued 11/5/2012 1:32:00 PM
Different advantages that lead states into trade and exchange. There are
also issue of trade restriction. Why do states still have protectionism if they
know that free trade is better?
For explicit reasons for trade barriers. Sometimes they protect domestic
level producers, or they protect infant industries. They can also prefer to
trade with states with shared cultural and political attributes.
there can be factor based preferences. The idea is that in some sense free
trade is most beneficial for factors that are most abundant in a state. They
promote liberal economic policies.
Owners of scare factors will tend to try to promote protectionist policies
because they are not competitive and will be wiped out.
Within these sectors, if you have a factor that is unproductive, everyone will
be for protectionism, regardless of social standing (owner, manager, worker,
This cuts at Marxism by saying that it is not class interest that determines
interest in free trade. Studies show that class interest is actually not that
sharp. In terms of who is able to have influence over trade, part has to do
with how institutions are arranged, and how quickly they can mobilize
How does this relate to IR? Economic trade can be seen analogously to the
Prisoner’s dilemma. States have incentives to defect or not cooperate with
others. According to certain concerns, some states have incentives to erect
The basic idea from the analogy is that trade competiton, if unregulated, can
lead lead to sub-optimal outcomes. If trade is supposed to be for mutual
benefit actors have incentives to look for other things, and everyone is less
well off. There is also an issue of uncertainty that arises at the system level. States
seem to have an incentive to behave in non-cooperative manners.
states have an incentive to not cooperate.
One thing that becomes clear is that there is a potentially political dimension
to issues of economic trade. This profoundly affects how economics works at
the international level.
theoretically, if states engaged in international trade in the way that you
would expect things would be okay. But
domestic level actors have divergent interests about protectionism, and
sometimes protectionist groups are more politically powerful than others.
there are also other considerations. Pay attention to Gilpton. There is a
strong tie between wealth and power. The idea is that wealth is fungible,
you can turn it into other things which can create power. The way that a
state uses its wealth, measured in terms of resources or trade potentially
affects its security, or its relative power. The security dilemma is measured
by the economic standing of nations. Power isn’t just how many soldiers
that you can have, but also how many economic powers you have.