INTL EXAM 3

Remittances

Money sent by migrants back to their home country, usually to families/individuals.

Importance of remittances

2nd largest source of external funding after FDI.

Remittances vs aid

Remittances are 2-3 times larger than official development aid.

Remittances and GDP

In over 28 countries, remittances exceed 10% of GDP (34% in Haiti).

Who receives remittances?

Individuals/families directly.

Uses of remittances

Consumption, investment, and education spending.

Stability of remittances

More stable than foreign investment because migrants keep sending money during crises.

Migration for development

Increase migration opportunities and make migration safer, cheaper, and fairer.

Types of migration policies

High-skilled, low-skilled, permanent immigration, temporary worker programs.

Protect migrants

Protect against exploitative recruitment brokers.

Improve asylum systems

Fair, open, and transparent asylum processes.

Remittance improvements

Make sending money cheaper, safer, and easier.

Right to asylum

Based on Universal Declaration of Human Rights (1948).

Asylum definition

Fear of persecution based on race, religion, nationality, political opinion, or social group.

Trade policy continuum

Range from free trade to autarky (protectionism).

Protectionism definition

Policies restricting imports to protect domestic industries.

Tariffs definition

Tax on imported goods.

Who pays tariffs?

Importers pay government, but consumers pay higher prices.

Effect of tariffs

Increase prices for consumers.

Domestic producer response

More competitive, may also raise prices.

2018 tariff example

Washing machine tariffs raised prices ~$86 each, costing consumers ~$1.5B.

Winners from tariffs

Domestic producers, workers in protected industries, government revenue.

Losers from tariffs

Consumers and downstream industries using protected goods.

Net effect of tariffs

Losses exceed gains → reduces national welfare.

U.S. trade authority

Congress has constitutional power over trade.

Presidential trade power

Expanded over time via delegation.

IEEPA (1977)

Allows emergency economic actions but does NOT mention tariffs.

Why Supreme Court limited tariffs

Only Congress can impose taxes; unlimited tariff power is unconstitutional.

Adam Smith specialization

Specialization increases productivity.

Pin factory example

20 pins/day → 480 pins/day with specialization.

Comparative advantage

Producing goods at lower opportunity cost.

Key idea of CA

All countries benefit from specialization.

Ricardo example

Portugal → wine, England → cloth.

Heckscher-Ohlin theory

Trade based on factor endowments (capital and labor).

H-O prediction

Export goods using abundant factors.

Germany vs Bangladesh

Germany exports capital-intensive goods; Bangladesh exports labor-intensive goods.

Who gains (H-O)?

Owners of abundant factors.

Who loses (H-O)?

Owners of scarce factors.

Inter-industry trade

Trade between different industries.

Intra-industry trade

Trade of similar goods within same industry.

Intra-firm trade

Trade within multinational corporations.

Globalization definition

Increasing global interconnectedness of goods, money, people, and ideas.

Drivers of globalization

Technology, lower transport costs, lower trade barriers.

Death of distance

Information flows reduce geographic barriers.

End of geography

Finance flows globally with fewer restrictions.

First wave globalization

Pre-WWI: steam engine, railroads, telegraph.

Second wave globalization

Post-WWII: internet, airplanes, telecommunications, AI.

Hyperglobalization

Extreme globalization starting around 1990.

Causes of hyperglobalization

Internet, end of Cold War, China integration, WTO, EU expansion.

Proximate causes of poverty

Immediate factors like education, health, investment.

Fundamental causes of poverty

Institutions and long-term structures.

Good institutions

Property rights, limits on elites, equal opportunity.

Tragedy of the commons

Overuse of shared resources leading to depletion.

Commons example

Shared grazing land.

Solutions to commons

Privatization or regulation.

Collective action problem

Individuals fail to cooperate for group benefit.

Free rider

Someone who benefits without paying.

Public good

Non-excludable and non-rivalrous (e.g., national defense).

Common pool resource

Rivalrous but non-excludable (e.g., fisheries).

Club good

Excludable but non-rivalrous (e.g., streaming services).

What is the main question about US vs China in climate leadership?

Which country will lead global efforts to fight climate change and transition to clean energy: the United States or China.

What does it mean that China has a state-directed approach to climate policy?

The government plays a major role in controlling the economy and directly invests in industries like renewable energy and green technology.

Why is China considered a potential green champion?

Because it heavily invests in renewable energy, electric vehicles, and clean technology through strong government planning and funding.

What types of green technologies is China investing in?

Solar power, wind energy, hydropower, electric vehicles (EVs), and battery technology.

What is a major advantage of China's political system in climate action?

It can make and implement large-scale environmental policies quickly due to centralized government control.

What is the Inflation Reduction Act (IRA)?

A major U.S. law that represents the largest climate-related investment in American history, focused on clean energy and emissions reduction.

What are the main goals of the Inflation Reduction Act?

To increase renewable energy use, reduce carbon emissions, support clean technology, and strengthen domestic green manufacturing.

How does the IRA try to compete with China?

By investing in U.S. clean energy industries and reducing dependence on imported green technology from China.

Why is domestic manufacturing important in the IRA?

It helps the U.S. build its own supply chain for clean energy technologies and create jobs while competing globally.

What shift did the Biden administration represent in climate policy?

A major increase in federal government investment in climate action and renewable energy.

What is expected to happen to U.S. climate policy under Trump?

Likely rollback of climate regulations and reduced federal support for renewable energy programs.

What is the Paris Agreement?

An international agreement where countries commit to reducing greenhouse gas emissions to limit global warming.

What would it mean for the U.S. to withdraw from the Paris Agreement?

It would reduce U.S. participation in global climate cooperation and weaken international climate leadership.

How could U.S. withdrawal from climate action affect global leadership?

It could create a leadership gap that allows China or other countries to take a stronger global role.

Why might China gain more global influence if the U.S. pulls back?

Because China would continue investing heavily in renewable energy and could set global standards for clean technology.

What is the key difference between U.S. and Chinese climate approaches?

The U.S. relies more on policy shifts and political cycles, while China uses long-term centralized government planning.

What is the global significance of the US-China climate competition?

It influences who leads the world in clean energy technology, emissions reduction, and climate policy direction.

What is one major uncertainty in U.S. climate leadership?

Climate policy can change significantly depending on which political party is in power.