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Stephan Krasner - Structure of International Trade

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McGill University
Political Science
POLI 354
Mark Brawley

State power and the structure of international tradeKRASNER StephanGeneral assumption Interdependence is not seen as a reflection of state policies and state choices the perspective of balanceofpower theory but as the result of elements beyond the control of any state or a system created by states Author disagrees with that assumptionAuthor thinks that structure has many institutional and behavioral manifestations The central one along which it can be described is openness International economic structures may range from complete autarky if all states prevent movements across their borders ex North Korea to complete openness if no restrictions exists ex Hong Kong Majority of states are somewhere in between Author presents an analysis of one aspect of the international economy the structure of international tradethat is the degree of openness for the movement of goods as opposed to cap ital labor technology or other factors of productionthBeginning 19 century this structure openness has gone through several changes Author uses the statepower theory an approach that begins with the assumption that the structure of international trade is determined by the interests and power of states acting to maximize national goalsst1 factorrelationship between 4 basic state interests aggregate national income social stability political power and economic growth AND the degree of openness for the movement of goods nd2 factorrelationship between different systems of distribution of potential power such as multipolar and hegemonic to different international trading structures The conclusion of this analysis is that a hegemonic distribution of potential economic thpower is likely to result in an open trading structureex 19 century Great Britain and then US Neoclassical trade theory is based upon the assumption that states act to maximize their aggregate economic utility This leads to the conclusion that maximum global welfare is achieved under free tradeState preferences aggregate national income social stability political power and economic growthAggregate national income conventional neo classical theory demonstrates that the greater the degree of openness in the international trading system the greater the level of aggregate economic income This conclusion applies to all states regardless of their size or relative level of development Trade gives small states relatively more welfare benefits than it gives large onesSocial stability greater openness exposes the domestic economy to the exigencies of the world market That implies a higher level of factor movements than in a closed economy because domestic production patterns must adjust to changes in international prices Social instability is thereby increased since there is friction in
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