POL114H5 Chapter Notes - Chapter 4: Free Trade, Absolute Advantage, Bretton Woods Conference
Chapter 4 - politcal perspectives on world economy. Reading 4 - political perspectives on world economy. The realist approach to ipe: states are concerned with relative gains in economic strength, see it as a zero sum competition, origins of this thinking found in mercantilism: advocates of balance of trade surpluses. Every state will find an economic niche (absolute advantage for every state) Comparative advantage: even if state a and b were trading and state a produced all goods more efficiently, there would still be some goods state b can produce better than. Critiques: not equal gains, widening gap between the least benefit and most benefit, environmental decay, keynesian liberals: based on great depression. Unregulated market activity means high unemployment, downturn in economy. Governments need to stimulate demand thru large public work projects. Government intervention in economy creates economic stability, larger social good: liberal institutionalism: the importance of international organizations and regimes in global economy.