|Week 3. The Economics and Politics of International Trade (RS)
Trade economics centres on an assessment of who gains and who loses from this-or-that policy. This session covers comparative advantage theory, the main theoretical arguments for protection (optimal tariffs, infant industries and strategic trade policy), and “trade in tasks” (which relates directly to GVCs). Trade politics revolves around explanations at the level of the international system and in domestic politics. System-level explanations emphasise state power and international cooperation. Domestic-level explanations emphasise interest groups, ideas and institutions. All these factors play into trade negotiations and trade agreements.
- What are the strengths and weaknesses of comparative advantage theory? How does “trade in tasks” differ from traditional comparative advantage?
- Choose one theory of protection (e.g. optimal tariffs, infant industries or strategic trade policy) and assess its strengths and weaknesses.
- Does a stable and open trading system depend on the exercise of hegemonic power? Or is the current trading system governed by “post-hegemonic cooperation” in “international regimes”?
- Choose one theory of domestic politics (e.g. interest groups, ideas or institutions) and show how it influences trade policy.
*Cowen, T. and Tabarrok, A. (2013), International Trade online course, MRUniversity, especially section 1 (of 8 sections) http://mruniversity.com/courses/international-trade
*Heydon, K. (2012), “The political economy of international trade”, in Kenneth Heydon and Stephen Woolcock eds., The Ashgate Research Companion to International Trade Policy, Ashgate, 2012, pp. 29-46 (IVLE)
*Hoekman, B. and Kostecki, M. (2009), The Political Economy of the World Trading System, ch. 4 (“Negotiating forum”), pp. 131-183 (IVLE)
Hoekman and Kostecki, Michal (2009), The Political Economy of the World Trading System, “The economics of trade policy – basic concepts”, Annex 2, pp. 676-699 (NUS Lib: HF1359 Hoe 2009)
Bhagwati, J. (2002), Free Trade Today, Princeton University Press (NUS Lib: HF1713 Bha)
Irwin, D. (1996), Against the Tide: An Intellectual History of Free Trade, Princeton University Press (NUS Lib: Hf 1713 Irw)
Krasner, S. (1976), “State power and the structure of international trade”, World Politics, pp. 317-347 http://www.indiana.edu/~gradipe/docs/krasner.pdf
Rogowski, R. (1987), “Political cleavages and changing exposure to trade”, American Political Science Review 81,4, pp. 1121-1137 http://www.indiana.edu/~gradipe/docs/rogowski.pdf
Rodrik, D. (2013), “Why doesn’t everyone get the case for free trade?” in The Globalisation Paradox, Oxford University Press, ch. 3, pp. 47-66 (NUS Lib: HF1418.5 Rod 2011)
Krugman, P. (1987), “Is free trade passé?” Journal of Economic Perspectives, Fall