POLI 243 Lecture Notes - Foreign Trade Of The United States

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18 Mar 2013
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The Politics of Trade Part II
Extensions of the H-O Model
The Stopler-Samuelson Theorem
Why are people opposed to Free Trade when it is ostensibly beneficial
Assumes factors may move from one application to another with ease, at no cost
There is really one market for labour and one market for capital
Specialization occurs rapidly and fully
Trade causes domestic prices to change; effect is passed on to returns earned by factors
Factor based or class cleavages result
Sector Specificity
Assumes factors can move from one application to another with great difficulty and only
at high cost
How to take fisherman to convert to computer programmer
Specialization occurs slowly and is never complete
Trade causes domestic prices to change; effect is passed on to returns earned by factors,
depending on which sector they are in
Sector based cleavages result
Stopler-Samuelson because all workers will oppose free trade because free trade drives
down wages
Current Debates on the Politics of Trade
Application of the Stopler-Samuelson (Ron Rogowski) 1989, 50 year gap
Stephen Magee
American trade policy is shaped by sector based interests
Lobby groups but not a lot of class cleavages
Is one cleavage observed more often than the other
When should we expect to see one rather than another
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