topic 8 Flashcards
international trade
the exchange of goods and services between two or more states, that is the foundation for international political economy because it shapes international relations and international development
growth of the international trade
has more than tripled since world war 2, but the benefits have been spread out unevenly, across the global south. Mostly going to BRICS nations more than the sub-Saharan countries.
fair trade definition
- fair trade- popularized after WW2 the international market needs to be regulated to protect the poorer southern countries free things like dependency, the effects of colonialism, and underdevelopment. ex: fair prices for farmers in the global south, removing unfair protectionist policies in the global north.
free trade
- popularized in the 1970s during the age of neoliberalism,
- no regulation in the free market with limited state intervention, the international market is capable of running itself with the “hidden hand” state intervention would be inefficient and a waist of resources, liberalized market would create the most gains.
- State is unable to regulate the market because it has little access to information and is biased by pressures of the unions and so forth
free trade supporters
world bank and world trade organization, is the most popular among the global north generally
Paul Krugman “New Trade Theory”
The advancements in transportation make industrialization better able to move and spread, which means many industries are expanding to the global south which mean more economic growth
fair trade argument
- no such thing as free trade, global north countries have grown due to a protectionist wall and protectionist policies in which the have easy access to global south (raw materials) that blocks access of the global south from their markets and gives them a dominant position in the global arena.
- because a history of colonialism global south cannot use international trade to enhance and exploit their comparative advantage
- there needs to be regulation to protect the global south and combat the regulations the global north has created for itself.
unequal exchange
lower priced commodity goods for higher priced industrial goods.
theory of comparative advantage
in order for everyone to benefit from trade they produce and export what they have a comparative advantage in and import what they cannot.
developments of trade
1944: Bretton Conference creates General Agreement on Trade and Tariffs (GATT), this process was spearheaded by the global north, and promoted liberal trade.
1964: UNCTAD (united nations conference on trade and development) the global south demands for fairer trading policies.
1970s: policies shift towards more neoliberal values
1994: WTO take over GATT and continue to promote neoliberal ideas
1990/200s: global south increasingly calling for better trading agreements
fair trade and social movements
- global south protesting against global north subsidies on agricultural exports,
fair trade network
a system that connects global south farmers and crafts people with global north organizations through “fair trade” principles in which their is minimum price level for goods, no exploitation of child labour, social premiums paid to support community infrastructure
criticism of fair trade movements
its ineffective because only 3% of corporations subscribe to fair trade principles and corporations use fair trade to mask their support for free trade: Starbucks 8% of coffee is under fair trade while the rest is under free trade.
rise of south-south trade
- raised from $2 billion to $60 billion
- uneven mostly among the BRICS countries
- increase in regional trade organizations
the Bolivarian alliance for the Peoples of Our America (ALBA)
- regional trade bloc organized by Cuba and Venezuela that is alternative to the free trade society, has 10 members
