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| 658811635 | First Era of Globalization | 19th Century | |
| 658811636 | What caused first era of globalization? | Technological Advances: steam engine, railroad, telegraph, telephone, etc. Travel and shipping was faster, cheaper, and all around easier. | |
| 658811637 | Globalization is fueled by... | Governments! Governments open economies up for trade | |
| 658811638 | Examples of governments "opening up" | Britain - Repeal of Corn Laws 1846 Britain and France - Cobden-Chevalier Treaty 1860 | |
| 658811639 | What caused a pulling away from globalization? | World Wars Great Depression | |
| 658811640 | Smoot-Hawley Tariff | Placed major taxes on imports into the U.S.; caused worse problems. | |
| 658811641 | Three theoretical traditions | Mercantilism Liberalism Marxism | |
| 658811642 | Mercantilism | an economic system (Europe in 18th C) to increase a nation's wealth - and therefore power - by government regulation of all of the nation's commercial interests; state directed resources to areas of national interest; limited imports | |
| 658811643 | Liberalism | the purpose of economic activity is to enrich individuals, not the state; supporters of freer trade; the state's role is only to establish and enforce property rights | |
| 658811644 | "Fathers of Liberalism" | Adam Smith David Ricardo | |
| 658811645 | Marxism | the political, economic, and social principles and policies advocated by Karl Marx that hold that human actions and institutions are economically determined and that class struggle is needed to create historical change and that capitalism will untimately be superseded; state is puppet of capitalists who have money and power | |
| 658811646 | What causes international economic policies of different governments? | Interests and Institutions | |
| 658811647 | Interests are... | the goals or policy objectives that the central actors in the political system and the economy want to use foreign economic policy to achieve | |
| 658811648 | Who are the central actors? | individuals, firms, labor unions, interest groups, and governments | |
| 658811649 | Material Interests | derived for actor's position in the economy | |
| 658811650 | Ideas | mental models that provide a coherent set of beliefs about cause-effect relationships | |
| 658811651 | Institutions... | enable groups within countries, and groups of countries within the international state system, to reach and enforce collective decisions | |
| 658811652 | Political Institutions | establish the rules governing the political process | |
| 658811653 | Domestic Systems | are hierarchic; central authority that upholds law and order | |
| 658811654 | International System | is anarchic; no central authority makes cooperation difficult | |
| 658811655 | The Enforcement Problem | that fact that it is impossible to know another state's true intentions and trust them to follow through on agreements | |
| 658811656 | Why do countries trade? | because they are different! | |
| 658811657 | How are states different? | different relative labor productivity across sectors; different relative endowments of inputs (land, labor, capital); varying laws and institutions | |
| 658811658 | Comparative Advantage | the advantage a state has in producing a certain good for export more efficiently than any other state | |
| 658811659 | Opportunity Cost | what comparative advantage is based off of; benefits a state could have received by taking an alternate action | |
| 658811660 | Free Trade | few restrictions on imports and exports; little government interference in pricing; priced determined by global markets | |
| 658811661 | Protectionism | regulation of imports and exports; tariffs and other rules manipulate prices; prices not wholly determined by global market | |
| 658811662 | Types of protectionist measures: | tariffs quotas subsidies "dumping" licensing requirements | |
| 658811663 | Trade Bargaining | governments exchange market access commitments and determine how trade will occur | |
| 658811664 | Regional Trade Agreements: | NAFTA EC --> EU MERCOSUR | |
| 658811665 | Global Trade Bargaining Forums: | GATT WTO | |
| 658811666 | GATT | general agreement on tariffs and trade; est. 1948; purpose to reduce tariff barriers; used principle of reciprocity and principle of non-discrimination | |
| 658811667 | Principle of non-discrimination | Most Favored Nation (MNF) | |
| 658811668 | Most Favored Nation | any trade barrier a state gets rid of for one state they must also get rid of for all the others in the organization | |
| 658811669 | WTO | world trade organization; replaced GATT in 1994; principles of reciprocity and non-discrimination; negotiations in rounds | |
| 658811670 | Doha Round | goals: to reduce US/EU barriers to agricultural products from emerging markets; reduce emerging markets barriers to manufactured goods from US/EU; currently at standstill | |
| 658811671 | Game Theory | An approach to evaluating alternative strategies in situations where the outcome of a particular strategy depends on the strategies used by other individuals. | |
| 658811672 | Prisoner's Dilemma | A type of dilemma in which one party must make either cooperative or competitive moves in relation to another party. The dilemma is typically designed so that the defective move appears to be in one's self-interest (a Nash equilibrium), but if both sides make this move, they both suffer more than if they had both cooperated. | |
| 658811673 | Nash Equilibrium | dominant strategy is to defect no matter what the other player is doing | |
| 658811674 | Stag Hunt Game | A game where either player can gain largely from cooperation or gain little by defection; depends on trust of other player | |
| 658811675 | Cooperation is difficult because... | states have incomplete info there are incentives to misrepresent fear of "suckers payoff" | |
| 658811676 | Shadow of the Future | cooperation emerges when players may meet again, casting a shadow back on the current situation | |
| 658811677 | Reciprocity | cooperate on the first move, then copy other player on the second; this punishes defection and rewards cooperation | |
| 658811678 | How the WTO facilitates cooperation: | creates expectations of repeated interaction; creates transparency by monitoring members behavior and collecting and disseminating info on trade policies; sets standards for evaluation of trade policy; sets up standard procedure for trade disputes (Dispute Settlement Mechanism-DSM) | |
| 658811679 | What determines trade objectives of governments? | interest group pressure domestic institutions states interests | |
| 658811680 | Factor Model | free trade raises income of those who own the locally abundant factor and reduces in income of those who own locally scarce factor (Stolpler-Samuelson) i.e. labor, land, capital; class competition | |
| 658811681 | Sector Model | trade divides society by sector or industry; assumes factors are immobile, therefore trade affects the income in all factors of the sector | |
| 658811682 | Interest groups are a... | public good | |
| 658811683 | Public Good | non excludable and non consumable | |
| 658811684 | Collective Action Problem | benefits everyone no matter who contributes; incentive to free ride | |
| 658811685 | How do interest groups overcome the collective action problem? | Small group size - easy to monitor, greater per capita benefit Privileged groups - those that get greater benefits will be more willing to carry the load Selective incentives - excludable benefits that can only be obtained by contributing | |
| 658811686 | Domestic Institutions | shape how competition between groups unfolds through establishing rules that influence interest group strategies | |
| 658811687 | Rules affect... | how and where interest groups exert pressure; which interests politicians must respond to | |
| 658811688 | Majoritarian Electoral System | single member districts, first past the post elections, can win with only plurality vote (sector model) | |
| 658811689 | Proportional Representation Electoral System | multi-member districts, distributes parties' legislative representation in proportion to their share in the popular vote (factor model) | |
| 658811690 | What is a veto player? | a political actor whose agreement is necessary in order to enact a policy i.e. president | |
| 658811691 | Who traditionally sets U.S. tariffs? | constitution empowers Congress to; RTAA of 1934 delegates it to the President | |
| 658811692 | State Interests | what politicians feel is better for the state as a whole as opposed to certain interest groups | |
| 658811693 | Infant Industry Protection | newly created firms will initially be inefficient and need protection to become competitive on the international level | |
| 658811694 | Why are infant industries initially inefficient? | Economies of Scale Economies of Experience | |
| 658811695 | Economies of Scale | cost of production varies with size of output | |
| 658811696 | Economies of Experience | efficient production requires skills that can only be acquired through production in that industry | |
| 658811697 | Industrial Policy | diverts resources toward particular group of industries they want to support | |
| 658811698 | Strategic Trade Theory | builds on infant industry case for protectionism, argues that markets in some sectors are not perfectly competitive but rather oligopolistic competition; creates justification for government intervention to increase national income | |
| 658811699 | Oligopolistic Markets | earn excess returns, greater than could be earned in other markets; therefore workers in such industry earn higher incomes, therefore increased national income | |
| 658811700 | First Mover Advantage | achieving economies of scale and experience by entering a market before competitors; state subsidies can alter this | |
| 658811701 | Dependency Theory | A structuralist theory that offers a critique of the modernization model of development. Based on the idea that certain types of political and economic relations (especially colonialism) between countries and regions of the world have created arrangements that both control and limit the extent to which regions can develop. World System - core and periphery | |
| 658811702 | Declining Terms of Trade | price of primary goods tend to decline relative to capital intensive goods | |
| 658811703 | Income Elasticity of Demand | degree to which a change in income alters demand for a particular product; manufactured goods have higher elasticity | |
| 658811704 | Incomes rising in core countries will... | barely increase percent spent on periphery products | |
| 658811705 | Incomes rising in periphery countries will... | greatly increase percent spent on core products | |
| 658811706 | Import Substitution Industrialization | generate industrialization by promoting domestic consumption of domestically produced goods; big internal markets; exporting goods discouraged | |
| 658811707 | Three components of ISI | high barriers to trade subsidies to industry state owned enterprises | |
| 658811708 | What about agriculture in ISI? | state-run agriculture marketing boards; farmers forced to sell goods to marketing board lower than world marketing price | |
| 658811709 | Why didn't ISI work? | budget deficits - government spending more than bringing in with revenues, protected industries never "grew up;" trade deficits - tended to import more goods than they exported as equipment for manufacture corruption - restrictions generated incentives for bribary | |
| 658811710 | Export Oriented Industrialization | high barriers on imports while implementing policies to encourage exports | |
| 658811711 | Export Oriented Policies: | export processing zones; fixed exchange rates; U.S. preferential access to markets; government influence | |
| 658811712 | Neoliberalism | A strategy for economic development that calls for free markets, balanced budgets, privatization, free trade, and minimal government intervention in the economy. | |
| 658811713 | Structural Adjustment Programs | WTO or IMF exchanged loans for policy reforms designed to reduce role of state and increase the role of the market in an economy | |
| 658811714 | How were SAPs implemented? | in a top-down manner; international institutions had more to do with the reforms than domestic ones did |
