Trade & Globalization.docx

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Political Science
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I. Post war economic order: After WWII, two ideas triumphed the global economy –triumphed among powerful western states and spread from there A. Liberal trade- liberalism, states individuals and global economy overall would be better off (richer and more stable) if govt. opened their economies to free trade and global economy o Triumphed = X system of absolute free trade without any protectionism but idea that openness and free trade was better than any alternative was dominant) o BUT not everyone agree with this (dependency theorist, Anti-globalization, and eastern block) yet most economic activity took place in the western arena; Liberal economics became something to be argued against B. Leadership- learned a lot from interwar period and Great Depression: that a leaderless global economy is dangerous o During interwar period, Britain was a declining hegemon and found itself unable to lead; US was a de facto hegemon, artificial unwillingness to lead ended up with no leader o learned that the global economy could benefit from a hegemon- one that was willing and capable to look after global economic interests as well as their own Postwar economic order as a result of twin realizations coming from liberal trade and leadership & many int’l economic institutions to hold up this order (Ex. GATWTO- help manage and promote global free trade; IMF; World Bank (International Bank on Reconstruction and Development) Institutions set up to help global economy II. Protectionism and the politics of trade o Free trade triumphed but not absolute---political obstacles of free trade o States most of time trade according to comparative advantage which plays an important role in how states position themselves economically but int’l political economy is X same as economic theory states aren’t dictated by theories of comparative advantage & don’t specialize as much as individuals domestically; instead states continue to develop ways to produce things they don’t have a comparative advantage in often because of protectionism A. What is protectionism? o Protecting domestic industry from international competition; discourage import; contrary to liberalism, distorts free market to gain advantage for a state/actors within o Can be done through a number ways (tariffs, tax on imports, but overtime has become incredibly difficult non-tariff variables – 1. only let a certain amount imported 2. give subsidies to domestic products so they can compete with cheaper imports 3. put regulations so it is harder to distribute/sell o *Protectionism keeps certain industries alive or bigger than they deserve to be in pure economic terms Ex) There is no reason why America’s automobile industry is as big as it is, or Continental Europe grow as much crops as it does B. Then WHY do states do it? 1. Relative gains o In the realm of politics, states are concerned with relative gains o Liberals argue pie will grow, but the size of pie does not matter; Worry about other states getting richer fastermay well be seen as problem even though not economically; worry that wealth could be used against them directly by military power or economic power o Worry because it is conversable to military power or because of economic power? Realist say, mostly because military power but others think US is worried about purely economic gains o Also between rich and poor states: global poverty has shrunk but gap is getting bigger  States quarrel over the distribution of pie, and the distribution may be more important than actual size of the pie 2. Vulnerability o Domestically, specialization doesn’t lead to worries of vulnerability, but internationally, it does o Japan- protect rice farms but if they don’t, cheaper rice would overflowovertime Japan would grow richer economically but politically Japan becomes dependent on world market for food o Key prediction of realism is that states will avoid putting themselves in dependent situations o If being vulnerable to your friends is different from to your enemies, we must look beyond realism, it wouldn’t see a difference Ex) US military automobile industrymake tanks 3. Domestic politics o NAFTA- agre
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