Exam2_ReviewPPT (1).pdf

10/31/22 EXAM #2 REVIEW POLS 160 PROFESSOR HILLEBRECHT 1 WEEK 8: IPE, 1 INTERNATIONAL TRADE: EXCHANGE OF GOODS AND SERVICES ACROSS BORDERS. 2 1 ...

10/31/22 EXAM #2 REVIEW POLS 160 PROFESSOR HILLEBRECHT 1 WEEK 8: IPE, 1 INTERNATIONAL TRADE: EXCHANGE OF GOODS AND SERVICES ACROSS BORDERS. 2 1  10/31/22 WHAT IS (FREE) TRADE? Free trade: trade w/o barriers. 3 COMPARATIVE ADVANTAGE States have a natural advantage to produce goods and services. These advantages depend on: Natural resources Labor force characteristics Technology Geography (shipping/transaction costs) 4 2  10/31/22 ECONOMIC LIBERALISM The market always knows the right price. States should “stay out.” Free trade Emphasizes absolute gains. 5 GOVERNMENT INTERVENTION: BARRIERS TO TRADE Tariffs Non-tariff “Market barriers Imperfections” Import taxes Quotas Corruption, Subsidies Monopolies, Restrictions Oligopolies and regulations 6 3  10/31/22 WEEK 9: IPE, 2 FINANCE : FINANCE IS THE MOVEMENT OF MONEY/CURRENCY ACROSS STATE BORDERS. 7 CURRENCY Sole legal tender of a country. “The national currencies are of no inherent value in another country, but can be exchanged one for another” (G & P p. 190). Countries tend to hold reserves of foreign currencies and gold as back-ups/safety. 8 4  10/31/22 Remember, currency is a tradable commodity. EXCHANGE RATES Exchange rates: how much one currency is worth on the international market compared to other currencies or gold. 9 INFLATION Inflation: Increase in the price of goods and services. “Too many dollars chasing too few goods.” Herb Stein 10 5  10/31/22 WEEK 10: DEVELOPMENT DEVELOPMENT OFTEN REFERS TO ECONOMIC GROWTH, BUT IT ALSO ENTAILS MUCH, MUCH MORE. 11 Capital Accumulation Rising per Capita Income WHAT IS Falling Birthrates (ECONOMIC) DEVELOPMENT? Skilled Population Adopted of New Technology Social Progress 12 6  10/31/22 GDP/capita HOW DO WE GINI Coefficient MEASURE DEVELOPMENT? Human Development Index Sustainable Development Goals 13 SO HOW DO WE PROMOTE DEVELOPMENT? Let’s revisit neoliberal economic policy. Three pillars to development: 1. Trade 2. Finance 3. Get domestic “house” in order...austerity measures. 14 7  10/31/22 COUNTRIES NEED $$$: HOW DO THEY GET IT? Trade World Bank & IMF Loans Foreign Aid Overseas Development Assistance (ODA) Oxfam Model Foreign Direct Investment (FDI) Microfinance Remittances 15 16 8