GEOG 102 Lecture Notes - Lecture 27: Full Employment, Autarchism, World Trade Organization

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12 Jul 2020
Geog 102
Cultural Geog
Spring 2017
Geopolitics of Trade
South South Trade
Anti WTO Protests
Free trade Propositions
Specialization patterns are determined by comparative costs
Or product differentiation
There is a rational calculation that each country can do to specialize in to get
best results
Appropriate relative prices create gains from trade through exchange
So does product differentiation
Specialization give more stuff than autarchy
Free trade increases welfare for all
Level playing field, flat world: free trade creates this, every country gets to participate
and be on the same page as other countries
Individual self interest= territorial interest
Free trade good, protection bad: any attempts to restrict free trade are inferior
Places are responsible for their development
Free Trade Doctrine
Identity your comparative advantage
Open your markets
Specialize and trade
Based on a series of simplifying assumptions
Assumptions of Trade Theory
Trade between two countries with two different commodities rather than the whole
world of trading is what the theory says
2x2 model works for 200x200 model
Full employment in each country; all money is productively invested in economy,
nothing being wasted
Balanced trade: import value=export value
Comparing equilibria (no transition costs): economy is in equilibrium
Transport costs: (don’t think about it at all or if do its limited and fixed) of moving
commodities around: fossil fuels
Labor and capital: immobile between nations
Countries: approximately equal size and power: no one country gets to dominate
global market
Perfect competition
Rational informed and self-interested actors
Uneven trade geographies: how has the doctrine worked out in practice
Pre-existing spatial division of labor (1960)
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