...Contrast liberal and mercantilist theories of international political economy and consider which approach is most apparent in the contemporary world. The following seeks to contrast liberal and mercantilist theories that have developed to describe and analyze the international political economy. Once the contrasts have been made conclusions as to which theory is the most apt or apparent in the contemporary world will be drawn. Both liberal and mercantilist theories have advantages and disadvantages when used to understand the international political economy in the present global system. Perhaps it would be more apt to describe the liberal theory as being neo-liberal as it has undergone a recent revival in popularity. It must be remembered that whether a state is most influenced by liberal or mercantilists theories that trade will never be completely free of duty and tariffs, as they are useful sources of revenue for governments. Governments also have to have relationships with other governments and non-state actors that may or may not share their worldview. Liberalism itself can be dated back to the English, American and French revolutions of the seventeenth and eighteenth centuries, when the mercantilist economic system evolved into capitalism. Liberals were originally regarded as being politically centrist or left wing in outlook but favoring little or no state intervention in the economy. In its original form liberal economic theory strongly advocated a free market...
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...Trade Trade Theory and Government Policy MERCANTILISM Country Focus: Is China a Neo-Mercantilist Nation? ABSOLUTE ADVANTAGE COMPARATIVE ADVANTAGE The Gains from Trade Qualifications and Assumptions Extensions of the Ricardian Model Country Focus: Moving U.S. White Collar Jobs Offshore HECKSCHER-OHLIN THEORY The Leontief Paradox THE PRODUCT LIFE CYCLE THEORY Evaluating the Product Life Cycle Theory NEW TRADE THEORY Increasing Product Variety and Reducing Costs Economies of Scale, First Mover Advantages and the Pattern of Trade Implications of New Trade Theory NATIONAL COMPETITIVE ADVANTAGE: PORTER’S DIAMOND Factor Endowments Demand Conditions Related and Supporting Industries Firm Strategy, Structure, Rivalry Evaluating Porter’s Theory Management Focus: The Rise of Finland’s Nokia FOCUS ON MANAGERIAL IMPLICATIONS Location First-Mover Advantages Government Policy SUMMARY CRITICAL THINKING AND DISCUSSION QUESTIONS CLOSING CASE: Trade in Information Technology and U.S. Economic Growth Learning Objectives 1. Understand why nations trade with each other. 2. Be familiar with the different theories explaining trade flows between nations. 3. Understand why many economists believe that unrestricted free trade between nations will raise the economic welfare of all countries that participate...
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...How Mercantilist Thought Is Responsible For the Exploitation of Slaves Amid Teghizadeh WHO 2001 Prof. Saad Abi. Hamad It is evident that the abuse of slaves in the mercantilist era was due to the naked greed of the Europeans. Mercantilism is an economic theory in which states that a nation’s strength and power comes from amassing bullion while expanding its trade. From a 16th century perspective, the idea that the prosperity of a nation depended on its supply of capital was quite logical. Since bullion was thought to be limited, acquiring large quantities of such were necessary not only because of its intrinsic value, but as a way to deny other political powers a slice of the cake. Mercantilists understood that wealth and monetary assets were one and the same, and such the progress of their nation depended on controlling these assets. This required the nation states to maximize the difference between exports and imports by stimulating imports while dissuading exports, under the logic that if foreigners bought more goods than you bought from them, then you would be able to amass a larger quantity of bullion and the balance of trade would be favorable to that nation. The policies that facilitated this model of economic growth were supported by the nation states, who benefitted from the assets provided by taxes and levies to build large military forces, which would in turn protect the business interests of the mercantile classes. The largest and most profitable commodity...
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...RAMOS, ROCELLE GRACE A. BSIE 2-1 The History of Economic Thought and Development Economics E conomic writings date from earlier Mesopotamian, Greek, Roman, Indian subcontinent, Chinese, Persian, and Arab civilizations. Notable writers from antiquity through to the 14th century include Aristotle, Xenophon, Chanakya (also known as Kautilya), Qin Shi Huang, Thomas Aquinas, and Ibn Khaldun. The works of Aristotle had a profound influence on Aquinas, who in turn influenced the late scholastics of the 14th to 17th centuries. Joseph Schumpeter described the latter as "coming nearer than any other group to being the 'founders' of scientific economics" as to monetary, interest, and value theory within a natural-law perspective. Two groups, later called 'mercantilists' and 'physiocrats', more directly influenced the subsequent development of the subject. Both groups were associated with the rise of economic nationalism and modern capitalism in Europe. Mercantilism was an economic doctrine that flourished from the 16th to 18th century in a prolific pamphlet literature, whether of merchants or statesmen. It held that a nation's wealth depended on its accumulation of gold and silver. Nations without access to mines could obtain gold and silver from trade only by selling goods abroad and restricting imports other than of gold and silver. The doctrine called for importing cheap raw materials to be used in manufacturing goods, which could be exported, and for state regulation...
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...Markets need a wide range of non-market institutions. They are not selfcreating, self regulating, self stabilizing, self-legitimizing. Markets cannot work properly and be politically sustained in their absence. We have to contend with a world economy that remains a patchwork in terms of governance … and moderate our ambitions regarding economic globalization We run one of two risks when we get the balance wrong: Recognizing the centrality of nation-states is nation states more likely to contribute to a healthy global economy than trying to eviscerate it ◦ legitimacy deficit when we push global rules too far ◦ Inefficiency and instability when we push global markets too far The balance of global forces is becoming more centrifugal The supply of global leadership will be in short supply s o t supp y ◦ Declining role of U.S. in global economy g g y ◦ EU likely to remain preoccupied with own matters ◦ China and the other emerging powers place, if anything, anything greater emphasis on national sovereignty The world economy is not a “global commons” (Misleading) analogy with climate change ◦ Open trade and finance policies are semi private goods semi-private ◦ where in the absence of global coordination, we get the “tragedy of the commons”...
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...restructuring has occurred. However, a more detailed examination of economic developments within each country offers less basis for optimism. China has experienced a large appreciation of its real exchange rate and an external surplus less than half that of the years preceding the global recession. However, the domestic counterpart has been even-higher rates of investment as opposed to lower rates of saving and a more sustainable growth of public and private consumption. For the United States, a reduction in the external deficit has been associated with an extreme contraction of domestic investment rather than increased saving. It is noteworthy that the economic trade between the two countries has become even more unbalanced than in the years before the recession, and the bilateral deficit now accounts for two-thirds of the U.S. global current account deficit. The concluding section argues that further reduction in the trade deficit through the expansion of U.S. exporting capabilities is critical to its future performance. The section discusses policy changes that would slow the process of shifting production facilities out of the United States and promote improved export competitiveness. Those measures include further devaluation of the dollar, reform of corporate taxation, and increased investments in education and physical infrastructure. For many years the economic dialogue between American and Chinese economic officials has centered on the imbalance of the bilateral trade between...
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...Bibliography 6 * * Introduction International trade may seem simple. It is simply the exchange of goods between two people or entities from two different countries. People trade because they get some kind of benefit in the transaction. Sometimes it is something that they need and sometimes it is something that they desire. International trade it is not always that simple. There is a lot of theory, business strategy and policy behind it. International trade can be described in many different ways. There are many different theories, classical and modern, that we use to describe International trade. Mercantilism Mercantilism was developed in the sixteenth century. It was the first effort in developing an economic theory at the time. This theory stated that a country’s wealth was determined by the amount of its gold and silver holdings (Anonymous, 2012). Mercantilists believed that a country should increase its holdings of gold and silver by promoting exports and discouraging imports. In other words the government would use policies to encourage exports while restricting imports. They would do this by rewarding merchants and producers with capital and by giving them tax exemptions. The merchants would then be more competitive both in the domestic and international economy so exports would increase and imports would decrease. The main objective of mercantilism is to increase the power of the country. They believed that to increase power they needed money. They...
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...bases to surround the USSR in the Cold War era, as part of its policy of containment. The Iraq war saw the USA effectively “go it alone.” • Some economic power is direct. The USA plays a major role in world trade, much of which is conducted in $. The US $ is the world’s reserve currency. • A key area of US international prestige since the 1960s has been the exploration of space. 1969 saw men on the moon. The USA aims to build a moon base by 2020 and visit Mars by 2037. Exercise of indirect power • Neo-colonialism (term coined by Kwame Nkrumah, first president of Ghana) is a form of indirect control over developing counties, most of them former colonies. Has neo-colonialism prevented any real development progress in the 40 years since colonies gained their independence? Africa could lead us to say yes. India could lead us to say no. • Some people say the IGOs were set up by superpowers for superpowers. The IMF was set up in 1944. It has its headquarters in Washington. Counties wishing to have their debt relieved have to apply Western economic policies devised by the World Bank and the IMF. This means they lose some of their economic sovereignty. • Global economic and political power is in the hands of a small number of players in the form of IGOs. The USA is a member of the G7, the G8, the UN Security Council, NATO, OPEC and the IMF. This means it can steer global policy and decision making in its own interest....
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...History of Capitalism By; Professor; Marion Wyse Table of content 1:1…….…..………………………………………………………………………Introduction 1:2..………….………………………………………………………………capitalism history 1.3.…….………………………………………..….. Merchant capitalism and mercantilism 1:4……………………………………………….. Transition from 'feudalism' to capitalism 1:5……………………………………………………. Industrial capitalism and laissez-faire 1:6…………………………………………… Finance capitalism and monopoly capitalism 1:7……………………………………………… Capitalism following the Great Depression 1:8……………………………...………………………………………………... Globalization 1:9………………………..………………………………………………………… conclusion 1:10……………………………………………………………………….…………. References The History of capitalism 1; 1 Introduction | Capitalism as we all know is an economic system of producing wealth in which the wealth is privately owned. in capitalism, the land, labor, and capital are owned and operated by private individuals who are trading for one purpose that is, the generation of more income or profits in a legitimate way without force or fraud, by singly or jointly, and investments, distribution, income, production, pricing and supply of goods, commodities and services are determined by voluntary private decision in a market economy. A distinguishing feature of capitalism is that each person is entitled to his or her own labor and therefore is allowed to sell the use of it to any employee. In a "capitalist state", private rights and property relations are protected by the rule of law of a limited regulatory...
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...commerce. At that time gold & silver were the currency of trade between countries,a country could earn gold & silver by exploiting goods. Conversely, importing goods from other countries would result in a outflow of gold & silver to those countries.The main tenet of mercantilism was that it was in a country’s best interest to maintain a trade surplus,to export more than it imported.By doing so,a country would accumulate gold and silver and, consequently ,increase its national wealth, prestige & power. Government policies: Consistent with this belief, the mercantilism doctrine advocated government intervention to acieve a surplus in the balance of trade.The mercatelists saw no virtue in a large volume of trade.Rather they recommended policies to maximize exports and minimize imports.To achieve this. import were limited by tarrif and quotas.while exports were subsidized. The concept of Balance of Trade: Some terminology of the mercantilist era has endured. A favorable balance of trade, For example, a country is exporting more than it is importing.An unfavorable balance of Trade indicates the opposite, which is known as deficit.Many of these terms are misnomers. For Example ,The word“ Fovorable” implies“ benefit” The word unfavorable suggests ”Disadvantages”It is not necessarily beneficial to...
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...ISAS Working Paper No. 85 – Date: 7 September 2009 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg An Economic Analysis of Bangladesh’s Foreign Exchange Reserves M. Shahidul Islam 1 Executive Summary Following the rapid accumulation of foreign exchange reserves in recent months, there has been a growing interest in Bangladesh on the alternative uses of its reserves. However, different reserves adequacy measures based on global best practices confirm that its reserves holding is not markedly higher than what is required. The country’s reserves stand higher than the adequate level only when one considers the current account aspects of reserves benchmark which is perhaps appropriate for the country as its financial system is still autarkic. The dynamics in its balance of payments account also supports the fact. The paper highlights the fact that Bangladesh’s reserves build-up is the result of an ‘investment drought’ in the country. This is partly due to its underdeveloped financial systems, and partly due to other structural problems in the economy – entailing difficulties in properly channelling national savings to investments. As the Bangladesh central bank’s sterilised intervention increases, so will its cost of reserves accumulation. The reason is the interest rate arbitrage between Bangladesh and the United States. The United States government securities...
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...The current economic situation has divided opinion on the use of trade protectionism.’ Discuss. ECONOMIC CRISIS AND PROTECTIONISM: A DISCUSSION Introduction First and foremost to logically explore the question at hand, the meaning of trade protectionism must be fully comprehended, according to Amadeo (2012) “Trade protectionism is used by countries when they think their industries are being damaged by unfair competition by other countries” The fundamental commotion of the pre-Great Recession on the economic order that was based on the assumption of inherent value of unlimited trade and capital flows has led to the new emergence of debate on trade protectionism as the means of combating the present crisis. In particular, the European Union (EU) nations have seen increasing calls for the implementation of the more protectionist economic policies. However, given the integrated and interconnected nature of both modern and specific national economies, one may note that protectionist policies would be more likely to hurt economic recovery and contribute to the sharpening of international trade contradictions. This paper presents an account of both parties’ argument, with the recourse to respective quantitative data, in order to substantiate the claim on infeasibility of treating protectionism as a cure for global and European economies’ maladies. The Impact of Protectionism on Crisis and Post-Crisis Developments According to Henn & McDonald (2011), trade protectionist...
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...EC312 International Economics Assessment (Q1) Student ID: 0926451 Word Count: 1, 498 The 2008 and subsequent global economic downturns were rooted in lax monetary policies and lack of financial oversight, leading to an aftermath of widening global imbalances, global liquidity abundance and downward pressures on real world interest rates. These resulted from mercantilist trade policies and an unprecedented increase in savings and foreign reserves of emerging economies in Asia. This essay will first explain the Mundell-Fleming (henceforth M-F) model and use it to compare current account deficits under different exchange rate regimes. It will also refer to real-life contexts and discuss limitations of the model. The M-F model portrays the short-run Keynesian relationship between an economy’s key macroeconomic variables. The assumptions and implications of the model are as follows: 1. The economy operates on a perfectly elastic aggregate supply curve. This implies that the level of economic activity, Y, is solely dependent on fluctuations in aggregate demand, as per the IS-LM framework. As prices are fixed, P is normalised to 1 and M represents both real and nominal money stocks. 2. The current account (CA) is determined independently of the capital account. PPP does not hold. CA deficits, as we will later see, depends on Y and the nominal and real exchange rate, e. The higher Y is, the greater the demand for imports; and the lower e is, the more uncompetitive domestic...
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...COLLEGE OF MANAGEMENT AND SOCIAL SCIENCES DEPARTMENT OF ECONOMICS DISCUSS THE VARIOUS ECONOMIC GROWTH THEORIES AND DEVELOPMENT THEORIES HOW CAN SUCH THEORIES BE USED IN ECONOMIC DEVELOPMENT IN NIGERIA. COURSE TITLE THEORY OF ECONOMIC DEVELOPMENT COURSE CODE;ECO 2911 INTRODUCTION According to Dennis Goulet in The Cruel Choice, “it matters little how much information we possess about development if we have not grasped its inner meaning”. Development is not purely an economic phenomenon. In an ultimate sense, it must encompass more than the material and financial sides of people’s lives, to expand human freedom. Every nation strives after development. Development and growth should therefore be perceived as a multidimensional process involving the reorganization and reorientation of the entire economic and social systems. The sources of economic progress can be traced to a variety of factors, but by and large, investments that improve the quality of existing physical and human resources, increase the quantity of these same productive resources, and raise the productivity of all or specific resources through invention , innovation and technological progress have been and will continue to be primary factors in stimulating economic growth in any society. ECONOMIC DEVELOPMENT THEORIES Definition of economic development It can be defined as the increase in the standard of living of a nation's population with sustained growth from a simple, low-income economy...
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...Interdependence and Conflict: An Introduction Edward D. Mansfield and Brian M. Pollins Over the past few decades, there has been a surge of interest in the relationship between economic interdependence and political con›ict. One view that has gained considerable popularity and empirical support is that heightened interdependence fosters cooperative political relations. Voiced with increasing regularity in both academic and policy circles, this claim has been used to help justify the formation of the European Economic Community, Richard Nixon’s opening to China, Willy Brandt’s Ostpolitik, and Henry Kissinger’s conception of détente with the Soviet Union. Nonetheless, critics of this argument have not been stilled. Some observers maintain that, rather than fostering cooperation, increased interdependence generates political discord. Even more widespread is the argument that economic exchange has no strong bearing on the high politics of national security. This debate is hardly new. For centuries, the nature and strength of the links between interdependence and con›ict have been the subject of heated disagreement. Until lately, however, these links remained the subject of remarkably little systematic scrutiny. In recent years, a growing number of studies have attempted to ‹ll this gap in the literature, but they have yet to resolve various crucial questions. Most important, how and to what extent does interdependence in›uence political antagonism? What are the causal...
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