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WorPol 10-2 - Comparative Advantage • One of the most...

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Global Political Economy (GPE) Aka International Political Economy The politics of international economic relations Or, the politics of int’l trade Main issues: trade, finance, MNCs, environment, development Trading Regimes Rules & principles around which international trade works o Multilateral (WTO) o Regional free trade areas (EU, NAFTA) East Asian FTA in negotiation o Bilateral trade agreements What is the role of government here??? o Engineering agreements and trade partnerships o Organize labor o Set prices Free Trade Adam Smith’s Wealth of Nations Free trade is good for everyone even when not all actors join in Promotes efficiency, fosters competition, provides opportunities to specialize and gain economies of scale (Crook, 1990) Ease of access to new technologies o Think about the role of the free market here Competitions fosters innovation, which is spread around due to others’ need to remain competitive with the innovator
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Unformatted text preview: Comparative Advantage • One of the most important economic concepts • Proposed by David Ricardo • Crook: Utopia and Flatland example CompAdv today • If there are no trade barriers, then comparative advantage drives trade • Free trade makes all countries better off • BUT the int’nat’l trading system has tariffs and trade protection • No such thing as a perfect free market in the real world Other concepts • Asymmetric dependence o Type of dependence in North-South trade o Poor southern countries dependant on north • Balance of trade o Trade surplus (e.g. China) or trade deficit (e.g. US) • Autarky: self-reliance (e.g. North Korea) • Centrally-planned economies, market economy, mixed economy • Dumping Friday: Global trade in textiles • Laborers • Industries • Gov’t’s • Int’nat’l orgs (WTO ILO NGOs and social movements • Consumers/buyers...
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