10PPT - trade. • In the 1940s, GATT organized first...

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Chapter Ten Trade and Investment
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Trade from the perspectives Realism: Sees trade and investment as geoeconomics, or an arena for competition. Liberal: Views trade and investment as an opportunity for non-zero sum gains. Identity: Sees trade and investment as a reflection of competing ideas.
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Comparative Advantage Specialization—brings economic freedom and Smith’s “invisible hand.” Comparative advantage—derived from specialization, comparative advantage allows countries to increase output.
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Exceptions to unrestricted trade National security export controls Protection of infant industries Strategic trade theory—assisting firms break into markets with large economies of scale
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Trade and jobs Trade destroys less-skilled, low-wage jobs. Trade creates more skilled, higher-wage jobs. On balance, trade does not create more jobs, but it does create better ones.
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Trade negotiations In the 1800s, Britain unilaterally liberalized
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Unformatted text preview: trade. • In the 1940s, GATT organized first multilateral trade round. • Today WTO organizes trade liberalization; most recent is Doha Round. Investment • Foreign direct investment—involves transfer of facilities to a foreign country. • Portfolio investment—involves transfer of money through loans and sales or purchases of stocks and bonds. Assessments of global investment • Realism: Does global investment undermine sovereignty? MNCs control large sums of money and therefore have tremendous clout; however, countries can play them off of one another. • Liberal: Emphasize the growing complexity of international markets and institutional deficiencies. • Identity: fear the erosion of distinctive developing country policies and cultures caused by global investment. Foreign direct investment also raises concerns about job loss in advanced countries, particularly at the lower end of the labor structure....
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This note was uploaded on 10/25/2011 for the course HUMA 002 taught by Professor Yu during the Spring '11 term at Alcorn State.

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10PPT - trade. • In the 1940s, GATT organized first...

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