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Overview

Overview. Midterm Reading takehomes IPE introduction Gains from trade Influence of trade institutions. Reading Takehomes. Frankel, “Globalization of the economy ”

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Overview

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  1. Overview • Midterm • Reading takehomes • IPE introduction • Gains from trade • Influence of trade institutions

  2. Reading Takehomes • Frankel, “Globalization of the economy” • There is an ongoing and consistent tension between forces that move the world toward more globalization and those that keep countries economically separate and there are a variety of identifiable factors that explain how this changes over time. • Ghemawat, “Why the world isn't flat” • Notion that world is fully globalized and everything/everybody is interconnected is simply not the case. Yes, more interconnected than before but still living within the borders of states rather than across them.

  3. International Political Economy

  4. Would You Support Congress Adopting A Trade Policy That • Increases the costs of your running shoes (or sugar) by 10-20% • Decreases jobs for people in Vietnam and China (or African countries) • Decreases profits for Oregon employers, including Nike and Adidas • Increases the profits of employers in New England (or Kansas and Nebraska)

  5. Per Worker Productivity This is a hypothetical example!

  6. Closed Economy(protectionism, no trade, 100 million workers in each economy ) This is a hypothetical example!

  7. Open Economy Production(free trade, 100 million workers in each economy) This is a hypothetical example!

  8. Open Economy Consumption(free trade, 100 million workers in each economy) This is a hypothetical example!

  9. Why Productivity, Not Wages, Matters:Build Cars in the US if ... Wages are FAR lower in Mexico than in the US but still cheaper to build cars in the US because of the lack of mechanization in Mexico. This is a hypothetical example!

  10. Why Productivity, Not Wages, Matters:Build Cars in Mexico if ... To make it cheaper to build cars in Mexico rather than the US, wages must be SUFFICIENTLY lower in Mexico to offset the lack of mechanization there. This is a hypothetical example!

  11. Other Factors This is a hypothetical example!

  12. Institutions:World Trade Organization • “Developed countries’ tariff cuts were for the most part phased in over five years from 1 January 1995. The result is a 40% cut in their tariffs on industrial products, from an average of 6.3% to 3.8%.” • “Over three quarters of WTO members are developing or least-developed countries. All WTO agreements contain special provision for them, including longer time periods to implement agreements and commitments, measures to increase their trading opportunities and support to help them build the infrastructure for WTO work, handle disputes, and implement technical standards.”

  13. Institutions:International Labor Organization • Convention concerning Equal Remuneration for Men and Women Workers for Work of Equal Value • “ensure the application to all workers of the principle of equal remuneration for men and women workers for work of equal value”

  14. http://cep.lse.ac.uk/leed/docs/public/genderpay_simon2.pdf and http://www.infoplease.com/ipa/A0882775.html

  15. International Trade: What Can our Theories Explain

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