POL 231 World Politics (Economic) Liberalism Three ... - MavDISK
POL 231 World Politics (Economic) Liberalism Three ... - MavDISK
POL 231 World Politics (Economic) Liberalism Three ... - MavDISK
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<strong>POL</strong> <strong>231</strong> <strong>World</strong> <strong>Politics</strong><br />
IV. International Political Economy<br />
A. Trade<br />
<strong>Three</strong> Variants of <strong>Liberalism</strong><br />
• Orthodox liberalism<br />
– Adam Smith: laissez-faire economics => efficiency<br />
and prosperity (against mercantilism)<br />
• Interventionist liberalism<br />
– John Maynard Keynes (against mercantilism)<br />
– Problems with unemployment<br />
– Demand manipulation<br />
• Institutional liberalism<br />
– Involvement of international institutions necessary for<br />
market activities<br />
– GATT, WTO, IMF, etc.<br />
(<strong>Economic</strong>) <strong>Liberalism</strong><br />
• <strong>Liberalism</strong> in IR<br />
• Individuals as primary economic actors<br />
– Invisible hand<br />
– Public policy resulting from interest group competition<br />
– State as an aggregate of individuals<br />
• International economic interactions: positive sum<br />
game<br />
• <strong>Politics</strong> and economics separable<br />
Mercantilism<br />
• Mercantilism (1500-1750)<br />
– A state’s power dependent on the accumulation of<br />
wealth (gold and silver)<br />
– Wealth and power<br />
– Alexander Hamiliton<br />
• Emphasis on industry, self-sufficiency, government<br />
intervention, and trade protectionism<br />
– Friedrich List<br />
• Germany behind Britain<br />
• Infant industry protection for catching up<br />
1
Realism (Neomercantilism)<br />
• States as primary actors, power politics<br />
• <strong>Economic</strong> interactions as zero-sum games<br />
– Distributive effect<br />
• Some may benefit more from trade than others<br />
• <strong>Politics</strong> and economics interconnected<br />
– Decline in industrial competitiveness => security<br />
concern<br />
– Free market and hegemonic stability<br />
• State’s protection of key industries (current and<br />
future)<br />
– High value-added, high tech<br />
– Not for jobs<br />
Protectionism<br />
• Why?<br />
– Political demand<br />
• Union=>Steel, Auto manufacurers<br />
– Infant industry<br />
• International competition<br />
– National security<br />
• High tech<br />
– Defensive measure<br />
• Anti-dumping<br />
Comparative Advantage<br />
• Natural endowment and trade<br />
– Japan: Auto production<br />
– Saudi Arabia: Oil extraction<br />
• Specialization and trade<br />
• Natural endowment?<br />
– Comparative (competitive) advantage can be<br />
created<br />
Trade Strategies: Protectionism<br />
Tools<br />
• Tariffs<br />
– Taxes on imports<br />
• Agricultural products<br />
• Quotas<br />
– Limits on quantity<br />
• Japanese exports to the U.S. in the 1980s<br />
• Subsidies<br />
– Production assistance<br />
• Airbus in EU<br />
• Regulations<br />
– Safety, environment, etc<br />
• Dolphin net<br />
2
GATT and WTO<br />
• Protectionism<br />
– Inefficient allocation of resources<br />
– Political implications<br />
• GATT (rules)<br />
– Multilateral Negotiations<br />
• Tariff reductions<br />
– Most-Favored Nation (MFN)<br />
• reciprocity<br />
– Uruguay Round<br />
• WTO (institution)<br />
– Permanent body<br />
– Dispute settlement<br />
Trade and <strong>Politics</strong><br />
• <strong>Politics</strong> and economy<br />
• <strong>Liberalism</strong> vs. Neomercantilism<br />
• Protectionism<br />
• International rules and institutions<br />
Bilateral and Regional<br />
Arrangements<br />
• Bilateral (Free Trade Agreements)<br />
– Specific agreement<br />
• Regional<br />
– European Union<br />
• No tariffs among members<br />
• Common external tariffs<br />
• Common currency<br />
• Harmonization of economic policies<br />
3
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