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Lecture 9 POLS2402 (Debates over international trade)

Lecture 9 POLS2402 (Debates over international trade) -...

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Lecture 9 (5 October 2011) Disputes over international trade: free or constricted? International trade is at heart of debates over collective self-determination vs integration with ROW. Hence there exist arguments for & against free trade; including debates over ‘fair trade’; ‘managed trade’; against predatory /discriminatory /preferential trade; trade as route to development vs ‘import replacement’ strategies for development; against parochial nationalism; against protectionism; * trade as the cause of inequality or lack of development; whether to restrict trade (imports) as a response to domestic downturn; whether to allow development of national capacities (e.g. industry) * [Political economy, disputes – Adam Smith, David Ricardo, John Stuart Mill, Alfred Marshall versus Friedrich List, Karl Marx, John Maynard Keynes, Karl Polanyi – free trade and specialization vs protectionism and self-sufficiency] JMK viewpoint (ref. week 3): self-sufficiency even if it’s costly (as much free trade as possible; as much self-sufficiency as necessary!) A global trading system: expansion of trade since 1600 when trade in non-luxuries began (??) (but remember 15th century triangular trade). Does exchange (common to all civilizations) = trade? No, says Polanyi. i.e. expansion of ‘trade’ refers to trade in ‘commodities’ (produced for exchange, not accidental surpluses). Idea that trade integrates & generates wealth  implies that national distinctiveness (and autonomy) should be reduced. Trade policy can be used to help development but needs to be supplemented by industry policy (and is unpopular with economic policy elites.)
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No consensus , contrasting viewpoints: historical battle between free trade and protection has not been within theoretical debates, but between free trade doctrine and protectionist practice . liberals say political barriers/ restrictions are irrational (in principle); nationalists/ neo-mercantilists insist they’re necessary for development (& protection of past achievements) . Do barriers to trade cause stagnation (loss of manufacturing, reduced living stds, via replacement of good jobs with bad ones)? Criteria? prices to consumers vs stimulus to development and diversity. Forms of protection: tariffs, quotas, currency controls, subsidies, administrative regulations, voluntary export restraints (VERs). Liberal trade theory proclaims (ricardian) ‘gains from trade’: comparative advantage implies both parties/ countries can benefit (a central argument in liberal political economy); mercantilist thought says no (   differential impacts, winners & losers)  deliberate sponsorship of ‘appropriate’ industry (with synergies).
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Lecture 9 POLS2402 (Debates over international trade) -...

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