lec_17_110B - Economics 110B World Economic History II...

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Unformatted text preview: Economics 110B World Economic History II Spring 2009 University of California, Davis Lecture 17: Global Economy in the 21st Century: Outlook and Prospects & Review Information on the FINAL The exam structure will be similar to the last exam. 10 Multiple choice. You will have a choice of 3 essay/short answer questions. You will choose to answer only 1. Everything since the beginning of term is fair game for inclusion on the exam. This is cumulative Today’s program Evaluations Wrap up from last lecture… Review A backlash to globalization? Trade increases total welfare. But still it has distributional consequences Globalization is another matter in a messy world with externalities, financial crises and politics. There was a backlash to globalization after 1870. Germany then many others raised tariffs, immigration curtailed in the 1920s etc. Also Latin America closed itself down under the delusion of “dependencia” A backlash to globalization? Free Trade is being embraced by poor nations and large, rich nations are less enthusiastic Fair Trade is seen as widely beneficial. Unions fear lower labor standards Moralists want to legislate abroad This allows arbitrariness to seep into trade policy, Furthers special interests. Canada was against free trade with the US because of our lower social benefits programs. Trade and backlash FDI is a two way street. Net job losses are very debatable. Wages in labor intensive industries should be falling via simple trade theory. They have not risen very fast. But is this due to technological changes or trade? Nations usually move out of labor-intensive sectors fairly quickly as they become richer Bottom line: let trade happen and fix up other problems with other policies. Subsidies, taxes and policies as appropriate. The future of Democracy and Capitalism Over time, waves of integration have been accompanied by waves of democratization. Economic growth and higher living standards are also supposed to bring democracy. Modernization theory says that as a nation’s middle class strengthens so does its demand for democracy. The reason that democracy is viable is that the bulk of voters will no longer be a threat to the elite in power. Will growth in China lead to democratization? The party appears to be increasingly responsive and amenable to economic growth “market preserving federalism” which sustains the government… Political stability is likely in the medium term 30 35 40 45 50 55 Trade Openness-2-1 1 2 Democracy 1870 1880 1890 1900 1910 Democracy (right axis) Trade Openness (left axis)...
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This note was uploaded on 11/08/2010 for the course ECN 110B 110B taught by Professor Wilson during the Winter '10 term at UC Davis.

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lec_17_110B - Economics 110B World Economic History II...

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