Lecture 2012 01 17

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10 Apr 2012
POL208 Lecture
Lecture 13
- International Politics- trying to connect IP to Economics
- This week: different economic dimensions in IP
- First up is trade:
- How trade and politics effect one another
- Trade dates back to ancient times
- Ex of trade: trading gold for salt. Why would some trade gold for salt? The reason is
because Salt is a necessity and people in the Sahara lives inward therefore it is not
readily available
- Other example of trade is the Silk Road which carries silk add other things across
Europe and Asia and Africa routes
- Age of exploration: was all motivated by trade. The early settlers moving from one place
to another
- However trade is not always peaceful, it can cause wars. For example- the Opium War
between China and England
oBritain wanted tea which China exports but China didn t continuously want what
England was giving them
oSo what the English did was developed Opium in their control in India. The
Chinese absolutely loved this but they eventually banned any trade of Opium
because of the success of it? Britain was furious so they threatened or caused
oThe effects of this was that the British took control of Hong Kong
- Globalization is involved in trade
- Some terms to be familiar with:
Transaction Costs
: cost of trade (including transportation but also risk etc.)
Opportunity Costs
: amount of some other good that is lost in order to obtain unit of given
good. (Being in university made you give up full time job)
Relative Prices
: The price of a good in terms of other goods (The Barter Price- Kindle
cost 1/5 of your $500 trip)
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