intr 3000 final

comparative advantage

need to know opportunity cost to decide which country has more advantage compared to other countries

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Heckscher-Ohlin trade theory

relative endowments determine comparative advantage

Trade barriers

tariff, quota, subsidies, prohibitions

Stolper-Samuelson theorem

owners of scarce factors of production favor protectionism, but owners of abundant factors favor trade

Ricardo-Viner (specific factors) approach

most demands for protection come from specific industries, not factors

WTO system

* all members in WTO have equal vote
* generally dominated by the largest trading states
* encourages cooperation by:
* collecting information about trade policies
* monitoring national compliance
* complaints are sent to dispute settlement body in the WTO

types of foreign investment

1. portfolio investments
* claim on some income but no management
* investors’ interests - the rate of return
* loans, stocks, and bonds
2. foreign direct investments (FDI)
* company owns and controls facilities in another country

problems with foreign investment

* both investors and countries they invest
* interest cooperating but want as much while giving as little
* debt payments can require
* raising taxes
* reducing gov spending services
* restraining consumption and wages

what can debt payments require

* raising taxes, reducing government services
* restraining consumption and wages

How can a country facing debt negotiate economic policies w/ the IMF?

* IMP will give inexpensive loans to country
* play major part in negotiations b/w sovereign governments and private financiers
* critics
* IMF as tool of international financiers
* doing little to assist poor nations in achieving economic development

Why are most companies multinational corporations?

to gain access to

* local market
* local resources

Problems of MNCs?

* not investing at home
* “outsourcing” jobs to countries w/ lower wages
* looking for pollution-friendly regimes
* seeking ethically relaxed governments

Appreciation (Strengthening)

the dollar goes up in value against some other currency

Depreciation (Devaluing)

the dollar’s value goes down against that of another currency

Lower interest rates

make it easier for people to borrow, allowing the economy to expand

Higher interest rates

make it harder to borrow, restraining demand

Fixed exchange rates

provide stability and facilitate international trade and investment

Floating exchange rates

* offer more freedom to pursue one’s own monetary policy
* However, can make international trade and investment much more difficult

Why Is Development So Hard to Achieve?

Three factors

* Geographic location
* Domestic factors (policies, infrastructure, politics, a variety of groups, powerful national goal)
* Domestic institutions

“Resource curse”

initial wealth gives rise to ensuing poverty

Import-substitution industrialization (ISI)

Policies that reduced imports and encouraged domestic manufacturing

* trade barriers
* subsidies to manufacturing
* state ownership of basic industries
* ex: Latin American countries in the 1970s and 1980s

Export-Oriented Industrialization

* manufacturers to produce for foreign consumers
* Techniques such as tax breaks, low-cost loans, and a weak currency helped make their products
* Ex) East Asian countries

Washington Consensus

The transformation towards a general acceptance of market-oriented policies

The Geneva Conventions (1949)

* Appropriate treatment of civilians and captured soldiers during times of war
* Do not kill or injure an enemy who surrenders

Responsibility to Protect (R2P, 2006)

* protect threatened populations from genocide, war crimes, ethnic cleansing, and crimes against humanity by any means necessary
* the right of states to intervene in the internal affairs of others even without that state’s permission.

Transnational advocacy networks (TANs)

* Important roles in changing behavior by promoting normative values
* Actors
* NGOs
* social movements
* foundations
* media
* churches
* trade unions
* other organizations.

Boomerang Model

The International Bill of Rights

* Universal Declaration of Human Rights (UDHR)
* International Covenant on Civil and Political Rights (ICCPR)
* The International Covenant on Economic, Social, and Cultural Rights (ICESCR)

Why are human rights controversial?

* States have different interests in human rights
* Human rights: human-created institution, evolving over time
* acceptable to use on terrorist suspects?

The most frequent form of violence

by governments against their own citizens

What are the effects of international human rights institutions?

may have a beneficial effect in the long run

Public good

nonexcludable and nonrival in consumption, free-rider, collective action problem

Cap-and-Trade

Firms may purchase credits from other. (Ex: Emissions Trading Scheme (ETS), Kyoto P.

Common pool resources

non-excludable but are rival in consumption

Joint Products

public goods bundled with private goods to facilitate cooperation

How much CO2 do developed states emit?

70 % of the world’s CO2 (US: 23 %)

How much does China’s greenhouse gases grow?

rapidly and dramatically

What are framework conventions?

general principles that states often negotiate and agree on

What are current issues?

* Weapons of mass destruction (WMD)
* The Rise of China
* Economic Globalization.