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International Development Studies
Leslie Chan

IDSA01 – Lecture 5 - Trade and Development  What is Trade o What one is better at doing something is beneficial for the coutries trading (comparative advantage) o Not always beneficial: One may not know what they are getting, and lack of information before the deal went through, trade is not voluntarily partaken (where a colonial power takes advantage of the colony; Boston Tea Party; see Indian Textile subsidy)  Trade of any sort can be damaging to the party receiving the trade o Trade is partaken voluntary because they want to benefit from it  You need to approach trade with the general idea that you will benefit  Trade between Countries o If both countries have full info and it is voluntary, the country will not trade with another country (unless they will somehow benefit) o Conglomeration (KIERAN IS GAY); It is difficult for leaders to know what is good for a country compared to what you and I know is good for us o All trade hurts some, benefits us o US vs China Trade  China wages is quite lower  Amount of capital is much higher in the West  These are complimentary differences  Comparative advantages are examined before trade  Sounds very beneficial, but it does not benefit EVERYBODY o Workers benefit; capitalists don’t in China o In US, capitalists gain, workers don’t  Communist vs Capitalist govt`s  Capital Intensive Industry  Does not create many jobs  Demand for labour = increase in wages o It will almost always never help everybody; it will help some and hurt others o Know how could intl trade be helpful before proving it is or isn`t helpful  History of World Trade 1850 o Ricordo, Strutenell economists and philosophers o When you balance out the winners and losers and info is equal along with voluntary, the theory is that both countries will benefit o Intl trade could have been the caravans travelling the desert is an example o Cost of transportation was VERY high  They have to be low before sending across the ocean th  End of 19 century saw a huge increase in trade because of railroad, ships  Cause and Effect  Countries grew fast because of trade  Combined process: fast growth in countries and in trade o Trade pulled countries out of poverty  Argentina o First wave was very beneficial  Mostly to British and Latin America former colonies  Ended for political reasons  First War made it dangerous to trade  War disrupts economies  Great Depression put a stagnation on trade o They didn’t have money to trade and wanted to protect their own nd o Then 2 War happened, and trade starts again and gets going in the 70`s  We are in a wave of globalization today  Costs of doing business in going dow  Info revolution  Neoliberal revolution begins in the 70s/80s  New way of thinking about economics and is defined as pro-market and anti govt intervention in economies  Controlling intl trade was one way was to get govts out o The british was the core of the industrial rev and got a head start on trade  The other countries protected their shit from Britain because brit had a head start  Americans protected against all of Europe  Canada protects against America  Domino process to protect goods from countries ahead of them  Free trade has been very abnormal in the histories of the world o Neoliberalism says that protection is a mistake  There was a persuasion from WB, IMF etc to developing countries to open up their markets  Over the past 30 yrs, a major policy change i
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