Study guide 3 - POL 1213 001: Topics: US in the World Study...

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POL 1213 – 001: Topics: US in the World Study Guide for Test #3 Ch. 5: Trade and Money 1. Theories (v. realities): Mercantilism – each state must protect it’s own interests at the expense of others not relying on int’l orgs to create a framework for mutual gains Liberalism – assumption of anarchy, building int’l orgs, institutions, and norms states can mutually benefit from economic exchanges Balance of trade – value of a state’s imports relative to its exports Comparative advantage – different states enjoy in producing different goods, states differ in their abilities to produce certain goods because of differences in natural resources labor force characteristics technology and other such factors Economic benefits of trade v. possible political costs – increase of efficiency of production, economy can be disrupted making workers possibly retrain and find new jobs and exchanging capital from other country, benefits tend not to be evenly distributed within a state, benefits from trade between countries can be unequal Political interference in markets: Monopolies/oligopolies, corruption, taxation, and tariffs – monopoly shared between a few large sellers allowing for tacit or explicit coordination to for the price up; individuals may receive payoffs to trade at non-market prices; political influence used both to generate revenue for govn’t and regulate eco activity by incentives; taxes applied to int’l trade, frequent source of int’l conflict Sanctions – political interference in free market most explicit with, against eco interactions of certain kinds or between certain actors Autarky – to avoid becoming dependent of other states, avoid trading and instead try to produce everything it needs by itself, self-reliance Understanding protectionism: 4 motives (domestic interests, infant industries, national security, prevent predatory practices … e.g. dumping) – political demands of imp domestic industries and interests, protection of industry considered vital to nat’l security, protect new industry as it starts up until it can compete on world markets, defensive effort to ward off predatory practices by foreign companies or states; dumping – products in foreign markets at prices below the min necessary to make a profit Tools (tariffs, non-tariff barriers, subsidies/tax breaks/loans, regulations … and economic nationalism … e.g. “buy American” philosophy) – tax imposed on certain types of imported goods and they enter the country, discourage imports with quotas, govn’t protects domestic goods cutting taxes or giving money to companies, use of eco to influence int’l power and relative standing in the int’l system
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2. Trade regimes -- 2 trends (global integration v. regional competing trading blocs) integration of industrialized regions with each other in a truly global market, emerging potential division of the industrialized West into 3 competing trading blocs each internally integrated but not very open to other two blocs
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Study guide 3 - POL 1213 001: Topics: US in the World Study...

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