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POLS1500 Oct 4.docx

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Political Science
POLS 1500
Andrea Paras

POLS1500 Oct 4, 2012 Global trade and finance International political economy (origin of poli-sci studies)  The two way relationship between international politics and international economics  Focuses on trade an financial transactions across borders  Mediated by technology Economic Globalization  Global diffusion of capitalism  trade and finance  Process in which international trade increases relative to domestic trade  call centers in India, trans-nationalization of services  Increased movement of goods, people, information and money across borders, with decreased time and cost (via technology)  World is increasingly defined by single markets rather than by many separate markets  Globalization of trade o Mercantilism: Government control of trade is used to promote economic and military security of the state  Accumulation of cold and silver (gold standard)  Self regulation  Building a network of overseas colonies  Forbidding colonies to trade with other nations  Export subsidies  Giant stockholding companies (eg the East India Companies, HBC) o Great depression  Protectionism: economic policy designed to cushion or insulate domestic industries form international competition  Tariffs, subsides, quotas, non tariff trade barriers  Gains in domestic consumption outweighed by losses of exports  Protectionist policies exacerbated global depression o John Maynard Keynes: Active government intervention in the economy to promote economic growth and stability  Global Economic Institutions o Bretton Woods institutions (1944)  IMF  World Bank o General Agreement on Tariffs and Trade (GATT) – (1947)  World Trade organization (1995) o Regional Economic organizations and agreements  ASEA (1967)  NAFTA (1994)  APEC  SAARC  Globalization of trade and the GATT o Government does not discriminate against imports or interfere with exports by using trade barriers o Most favored nation principle: any preferential trading agreement reached with one country must be extended to other countries o Non discrimination: a states tariff on a good is the same for all trading partners o Puts all foreign producers on equal footing o Produces competition based on comparative advantage   World Trade organization (WTO) o Uruguay Round (1986-1994)  WTO (1995) o Member based organization (157 members) o Purpose:  Forum for negotiating trade agreements  Dispute settlement process (enforcement of mechanism)  Means of enforcement of terms of trade, outcome binding on both parties, ability to impose penalties  Operates a system of trade rules  Monitor national trade policies  Technical assistance an training for developing countries o “One member, one vote” o Members decide on a “single undertaking” o Executive committee of most influential members  Trade barriers o Tariffs o Subsidies (eg agricultural subsidies; benefits for producers) o Other barriers  Quotas  Domestic content laws  Voluntary export restraints  Health and environmental regulations  DOHA Development Round o 2001-present (curren
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