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Kantian Peace Supplement

Kantian Peace Supplement. The Economic Interdependence – Peace Hypothesis. Argument: Mutual gains from trade create incentives for peace, because conflict is expected to reduce or end trade. -Short explanation: Trade is voluntary -Longer Explanation: Absolute and Comparative Advantage.

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Kantian Peace Supplement

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  1. Kantian Peace Supplement

  2. The Economic Interdependence – Peace Hypothesis Argument: Mutual gains from trade create incentives for peace, because conflict is expected to reduce or end trade. -Short explanation: Trade is voluntary -Longer Explanation: Absolute and Comparative Advantage

  3. Missiles 20 10 100 200 10 Coffee Absolute Advantage Given 100 resources, what can each country produce? • Production possibilities without trade • Trade allows specialization. US buys Coffee at < 10 resources. Colombia buys Missiles at < 20 resources. • Example: Coffee = 1, Missiles = 10. US trades 5 missiles (50 resources) for 50 coffee (50 resources) • Result: Both sides can achieve levels of consumption outside of the original production possibilities!

  4. Wheat 100 50 5 10 Cars Comparative Advantage Given 100 resources, what can each country produce? • US has absolute advantage in both goods but 5 to 1 in wheat and only 2 to 1 in cars -- so has comparative advantage (bigger relative advantage) in wheat • UK has comparative advantage (smaller relative disadvantage) in cars (½ as productive rather than 20% as productive) • UK buys wheat at < 5 resources, US buys cars at < 10 resources • Example: Wheat = 1.5, Cars = 9. US sells 24 wheat (36 resources), buys 4 cars (36 resources)

  5. Trends toward world peace • Kant: Democracy, Interdependence, IGOs  trend toward world peace • All data presented begins in 1816

  6. Average IGO Memberships / State, Since 1816

  7. % States Democratic Since 1816

  8. World Trade Dependence (Trade/GDP) Since 1816

  9. Per-Capita GDP by Region Since 1816

  10. "International finance has become so interdependent and so interwoven with trade and industry that ... political and military power can in reality do nothing.... These little recognized facts, mainly the outcome of purely modern conditions (rapidity of communication creating a greater complexity and delicacy of the credit system), have rendered the problems of modern international politics profoundly and essentially different from the ancient."

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