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Issue Analysis Paper

Issue Analysis Paper - Adam Petrone PSC 003 10 Professor...

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Adam Petrone PSC 003 – 10 Professor David Quinn MW 9:35-10:50 May 3, 2006 On Free Trade: An In-Depth Look At The Costs and Benefits To Developing Countries Introduction The problem of getting less-developed countries caught up with the world’s wealthier nations is one that elicits two separate and distinct analyses of the effects of globalization: 1) allowing for free trade by removing barriers and devices of protection in order to allow globalization to benefit the world’s poor countries and 2) globalization is not a shortcut to development; economic growth comes from taking certain strategies that have succeeded in the past and combining them with a domestic growth strategy which relies upon domestic investors and domestic institutions (Rodrik, 2001, p. 55) Openness to trade is good for development “International Trade” is an article by Arvind Panagariya, a professor of economics at the University of Maryland, College Park, which appeared in the November/December issue of Foreign Policy . Panagariya wrote this article to address the general question “Why have disagreements between rich and poor nations stalled the global trading system?” (p. 20) His simple answer is that the debate over fair trade often does not properly address certain key facts. It is from this point that Panagariya develops his argument by introducing common ideas involved in the debate and confirms, denies or explains the whole story using case examples of countries.
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Domestic solutions for domestic problems “Trading in Illusions”, an article from the March/April 2001 issue of Foreign Policy was written by Dani Rodrik, a professor of international political economy at the John F. Kennedy School of Government at Harvard University, in order to strike down the World Bank and International Monetary Fund’s (IMF) general mantra for aiding developing countries in catching up to the rest of the world. That is, in order for developing countries to improve their economic and social conditions, their best strategy is to become globally integrated by opening their economies to foreign trade and investment quickly and to the greatest extent possible. Rodrik takes issue with this writing “globalization is not a shortcut to development” (2001, p.55). Instead, he argues, the key to development in the world’s poorest countries is to rely upon a domestically conceived development strategy which relies upon investors and institutions based in their own country (p. 55). Rodrik believes that developing countries are being hurt by rules set up by the IMF and World Bank which require comprehensive institutional reforms before joining the world economy that supposedly are set up to help them grow.
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