Chapter 10 - States and Markets in the World Economy

Question 1

What are the 3 Traditions of Thought in International Trade?

Answer 1

1) Economic Liberalism
2) Economic Nationalism
3) Marxism

Question 2

What are some features of Economic Liberalism? (5)

Answer 2

1) Within broader liberalist tradition
2) Focus on free markets
3) focus on absolute gains
4) free trade creates interdependence and pacifying effect
5) states trade due to comparative advantages

Question 3

What are some features of Economic Nationalism? (5)

Answer 3

1) perhaps within realism?
2) states are in competition with other states
3) states should regulate markets to favour national interests
4) focus on relative gains
5) economic development does not happen automatically: the state must facilitate it

Question 4

What are some features of Marxism? (2)

Answer 4

1) the state protects and advances the intersts of the capitalist class
2) the class struggle takes place between capitalist rich countries and less developed countries

Question 5

What are 2 problems with Economic Liberalism?

Answer 5

1) Comparative advantage locks-in the current division of power
2) Interdependence can trigger conflicts, vulnerability, and war

Question 6

What is vulnerability to resource cut-offs?

Answer 6

When a state is unable to shift its imports to another source (Keohane)

Question 7

What is sensitivity to resouce cut-offs?

Answer 7

When a state can shift their imports to another source (but potentially at a delay or higher cost)

Question 8

What is the Golden Straitjacket and who propones it? (2)

Answer 8

1) Friedman

2) to flourish in world econ, govts must emphasise private sector, keep inflation low, currencies stable, markets open

Question 9

What does the Elephant Curve show and who made it? (2)

Answer 9

1) Milanovic
2) Neither the world’s very poorest nor the bottom 90% of the populations in US and W.EUR have benefitted from globalization in terms of income growth

Question 10

Factors suggesting Globalization has peaked? (5)

Answer 10

1) Changing Trade Patterns (reshoring, not clear manufacture-design divide)
2) rise of protectionism
3) institutional stress (WTO arbitration blocked, IMF not representative)
4) Regionalization (fragmentation into blocks)
5) Regulatory and value competition

Question 11

3 Goals states may pursue through free markets?

Answer 11

1) Increasing national wealth
2) influencing political and econ orientation of other states
3) shaping the overall pol orientation of the international system