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11 Chapter 09-Trade water


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Unformatted text preview: n trade • Overcomes different allocation of resources • Ricardo’s Model of Trade •Comparative advantage ­ mutual gains even if one party has absolute advantage in all goods •specialization •goods less expensive/more efficient production Neoliberal Position – ‘Spill­over’ Neoliberal Position – ‘Spill­over’ benefits of Free trade • Promotes Interdependence – raises costs of conflict, leads to cooperation • Leads to economic growth that in turn leads to the development of democracy – Economic growth requires a free market – A free market needs a ‘middle class’ – Middle class demands political participation “the bourgeois revolution” Neoliberal View on Obstacles to Neoliberal View on Obstacles to Trade • Well­connected groups try to politicize trade – Benefits outweigh the costs: – There are winners and losers • benefits concentrated, costs are dispersed •Eg. The US car industry • Free Markets need some degr...
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