State Power and the Structure of International Trade

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Political Science
Lilach Gilady

thPOL208Y1 Introduction to International Relations January 17 2012 State Power and the Structure of International Trade Krasner Stephen D 2000 State Power and the Structure of International Trade In Jeffery A Frieden and David A Lake eds International Political Economy Perspectives on Global Power and Wealth Boston BedfordSt Martins pp 1936 State economic structure may range from complete autarky if all states prevent movements across their borders to complete openness if no restrictions existThe structure of international trade the degree of openness for the movement of goods as opposed to capital labour technology or other factors of production th Since beginning 19 century structure has undergone changes explained by statepower theory an approach that begins w the assumption that the structure of international trade is determined by the interests and power of states acting to maximize national goals4 basic states interests aggregate national income social stability political power and economic growthPotential economic power is operationalized in terms of the relative size and level of economic development of the stateHegemonic distribution of potential economic power is likely to result in an open trading structure th 2 major organizers of structure of trade since beginning of 19 century Great Britain and the US have both been prevented from making policy amendments in line w states interests by particular societal groups whose power has been enhanced by earlier state policiesThe Casual Argument State interests state power and international trading structuresNeoclassical trade theory based on assumption that states act to maximize their aggregate economic utilityMaximum global welfare and Pareto optimality are achieved under free tradeNeoclassical theory recognizes that trade regulations can be sued to correct domestic distortions and to promote infant industriesState PreferencesNeoclassical theory demonstrates that the greater the degree of openness in international trading system the greater the level of aggregate economic incomeTrade gives small states relatively more welfare benefits than it gives to large onesGreater openness implies a higher level of factor movements than in a closed economy because domestic production patterns must adjust to changes in international pricesThus social instability increases since there is friction in moving factors particularly labour from one sector to anotherImpact will be stronger in smaller states than in large and in relatively less developed than more developed ones
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