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Lecture

IDS A01 Trade and Devlopement Lectu


Department
International Development Studies
Course Code
IDSB01H3
Professor
Liang Chen

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October 20, 2010. Pg #1
TRADE AND DEVELOPEMENT
What is trade?
Trade is not always mutually beneficial.
1)One of them may not she/he is getting lack of information before trade
2)Trade is not voluntarily undertaken - hurts one party (colonial power takes
advantage of colony through unfair trade even though colony did not agree)
Colonial power taking advantage of colony = British over India
India did want to have their textile industry shrunk but did not have a choice
Voluntary trade = assuming that you will benefit from it
1) trade can be beneficial between individuals
People have full info of what getting and giving = voluntary
Political leader make decisions country level
Country leaders may think they will benefit even if they dont
International trade between two countries hurt some and benefit others
Canada / US and China china has lower wages Canada/us has more capital
Each country is going to better at some thing the the other country
Will have COMPARATIVE ADVANTAGE!
Canada will have advantage in machinery and wheat
China advantage in rice and clothing low wage rate = more ppl to make clothes
Assumption = both will get what they are not good at
Does not benefit everybody in both countries
Who is going to benefit?
China more clothing = more workers = more wage rate
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October 20, 2010. Pg #2
China- less machinery, doesnt create much jobs any way CAPITAL INTESIVE
JOB
WAGE RATE GOES UP WHEN DEMAND FOR LABOUR GOES UP
LOWER WAGE IN CANADA CAUSE PRODUCING LESS
Capitalists = loose
Chinese workers = WIN
In Canada, CAPITALISTS WIN, workers lose run by capitalists
TRADE WILL ALWAYS HURT SOME GROUPS IN COUNTRIES
History of International Trade
Extremely rare and high value
Recent decades = reduce in transportation costs. i.e. sea travel
19th cen = huge increase of world trade
Because of reduced transportation cost through water and land (railroads)
Cause and effect combined process
First wave of globalization
Trade pull some countries out of poverty ex. Argentina
Out of European market but had wheat
Got hooked into world market
Europe was ahead because of buying power
Beneficial to a lot countires especially british former colonies and former latin
American colonies
Not to beneficial to still colonized colonies ex. France, Netherlands
WW 1 trade becomes dangerous and economy not doing well
Trade becomes dangerous = trade goes down
Countries wanted to protect their own industries, not buy others
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