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INTERNATIONAL TRADE CHAPTER 8 Events 28-30

INTERNATIONAL TRADE CHAPTER 8 Events 28-30. WORLD ORGANIZATIONS DEMOCRACIES / REPUBLICS TRADE. WORLD ORGANIZATIONS DEMOCRACIES / REPUBLICS TRADE. LIBERAL AND SOCIAL THEORIES Events 7-9. INTERNATIONAL TRADE. WHY DID JAPAN ATTACK THE U.S. IN 1941?

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INTERNATIONAL TRADE CHAPTER 8 Events 28-30

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  1. INTERNATIONAL TRADE CHAPTER 8 Events 28-30

  2. WORLD ORGANIZATIONS • DEMOCRACIES / REPUBLICS • TRADE • WORLD ORGANIZATIONS • DEMOCRACIES / REPUBLICS • TRADE LIBERAL AND SOCIAL THEORIESEvents 7-9

  3. INTERNATIONAL TRADE WHY DID JAPAN ATTACK THE U.S. IN 1941? • WILSON REJECTED JAPAN’S CLAIM TO GERMAN CONCESSIONS IN SHANTUNG, CHINA AFTER WWI • IN 1921, AT THE WASHINGTON NAVAL CONFERENCE, THE UNITED STATES PRESSURED THE BRITISH TO END THEIR 20-YEAR ALLIANCE WITH JAPAN.  THE BRITISH ENRAGED AND ALIENATED A PROUD NATION THAT HAD BEEN A LOYAL FRIEND. • WHEN CIVIL WAR BROKE OUT IN CHINA, JAPAN IN 1931 OCCUPIED MANCHURIA AS A BUFFER STATE • A VAST COLONY TO EXPLOIT IT LIKE THE BRITISH IN INDIA

  4. INTERNATIONAL TRADE • WHEN FRANCE CAPITULATED IN JUNE 1940, JAPAN MOVED INTO NORTHERN FRENCH INDOCHINA • THE UNITED STATES IMPOSED AN EMBARGO ON STEEL AND SCRAP METAL • AFTER JAPAN INVADED INDOCHINA, THE U.S. BLOCKED ANY JAPANESE PURCHASES OF U.S. OIL • FACING A CHOICE BETWEEN DEATH OF THE EMPIRE OR FIGHTING FOR ITS LIFE, JAPAN DECIDED TO SEIZE THE OIL FIELDS OF THE INDIES • THE ONLY FORCE CAPABLE OF INTERFERING WAS THE U.S. FLEET THAT FDR HAD CONVENIENTLY MOVED FROM SAN DIEGO OUT TO HONOLULU

  5. INTERNATIONAL TRADEEvent 28 • INTERNATIONAL TRADE AMOUNTS TO A SIXTH OF THE TOTAL ECONOMIC ACTIVITY IN THE WORLD • TRADE IS NOT ONLY AN ECONOMIC ISSUE BUT A HIGHLY POLITICAL ONE • IT CROSSES BORDERS • IS REGULATED https://www.youtube.com/watch?v=geoe-6NBy10 (10 MIN)

  6. INTERNATIONAL TRADEEvent 28 • THE SCHOLARS OF INTERNATIONAL POLITICAL ECONOMY (IPE) STUDY THE POLITICS OF INTERNATIONAL ECONOMIC ACTIVITIES. THE MOST FREQUENTLY STUDIED ARE: (#1) • TRADE • MONETARY RELATIONS • MULTINATIONAL CORPORATIONS

  7. INTERNATIONAL TRADEEVENT 28 THEORIES OF TRADE MERCANTILISM ECONOMIC LIBERALISM

  8. INTERNATIONAL TRADEEVENT 28 • MERCANTILISM (#2A) • EACH STATE MUST PROTECT ITS OWN INTERESTS AT THE EXPENSE OF OTHERS • EMPHASIZE RELATIVE POWER: WHAT MATERS IS NOT SO MUCH A STATE’S ABSOLUTE AMOUNT OF WELL-BEING AS ITS POSITION RELATIVE TO RIVAL STATES. • HOLDS THAT THE IMPORTANCE OF ECONOMIC TRANSACTIONS LIES IN THEIR IMPLICATIONS FOR THE MILITARY. WEALTH AND TRADE TRANSLATE TO MILITARY POWER. • https://www.youtube.com/watch?v=Bouw3MvmrYM

  9. MercantilismEvent 28

  10. INTERNATIONAL TRADEEVENT 28 • Economic Liberalism (#2b) • A belief in the possibility of cooperation to realize common gains • It holds that by building international organizations, institutions, and norms, states can mutually benefit from economic exchanges. • It matters little to liberals whether one state gains more or less than another—just whether the state’s wealth is increasing in absolute terms. • https://www.youtube.com/watch?v=HYaglxhjYis

  11. INTERNATIONAL TRADEEvent 28

  12. WORLD ORGANIZATIONS • DEMOCRACIES / REPUBLICS • TRADE • WORLD ORGANIZATIONS • DEMOCRACIES / REPUBLICS • TRADE LIBERAL AND SOCIAL THEORIES

  13. INTERNATIONAL TRADEEVENT 28 • BALANCE OF TRADE (#3) • THE VALUE OF A STATE’S IMPORTS RELATIVE TO ITS EXPORTS. • A STATE THAT EXPORTS MORE THAN IT IMPORTS HAS A POSITIVE BALANCE OF TRADE, OR TRADE SURPLUS. • https://www.youtube.com/watch?v=enbjJHBO9pY

  14. INTERNATIONAL TRADEEVENT 28 • OPPORTUNITY COST (#4) • THE MOST DESIRABLE GOODS AND SERVICES THAT MUST BE FORGONE IN ORDER TO OBTAIN SOMETHING ELSE https://www.youtube.com/watch?v=NwOYLV-L7pc

  15. INTERNATIONAL TRADEEVENT 28 • COMPARATIVE ADVANTAGE (#5) • THE ADVANTAGE THAT EACH STATE HAS IN PRODUCING A GOOD OR SERVICE. • HOW IT WORKS? EACH STATE SPECIALIZES IN PRODUCING THE GOODS FOR WHICH IT HAS AN ADVANTAGE AND THEN TRADE FOR GOODS THAT ANOTHER STATES PRODUCES BEST. • FREE TRADE ALLOCATES GLOBAL RESOURCES TO STATES THAT HAVE THE GREATEST COMPARATIVE ADVANTAGE IN PRODUCING EACH KIND OF COMMODITY.

  16. BALANCE OF TRADE1985-2014Event 28

  17. COMPARATIVE ADVANTAGEEVENT 28

  18. COMPARATIVE ADVANTAGEEVENT 28 CLOTH 100 90 ENGLAND PORTUGAL 120 80 WINE

  19. INTERNATIONAL TRADE EVENT 28 • Demand (Consumers) • If the price rises, fewer people are willing to buy it • Supply (Producers) • If the prices rises, more sellers are willing to supply the items to buyers • Market Price (Consumers and Producers) • The price at which the supply and demand curves cross

  20. THEORIES OF TRADE (cont’d)Event 28

  21. MARKET PRICE EQUILIBRIUM(Oil) Price S (Oil Production) 6 5 4 3 2 1 D (Demand for Oil) 0 1 2 3 4 5 6 7 8 9 10 Quantity A

  22. SURPLUS Price S(Oil Production) 6 5 4 3 2 D (Demand for Oil) 1 0 1 2 3 4 5 6 7 8 Quantity Demanded B C A

  23. SHORTAGE(Oil Prices) Price S (Oil Production) 6 5 4 3 2 D 1 0 1 2 3 4 5 6 7 8 Quantity Demanded A D E

  24. MARKET PRICE EQUILIBRIUM(Oil Prices) Price S (Oil Production) 6 5 4 3 2 D (Demand for Oil) 1 0 1 2 3 4 5 6 7 8 Quantity Demanded A

  25. INTERNATIONAL TRADE EVENT 28#7 • MONOPOLY • ONE SUPPLIER OF AN ITEM • OLIGOPOLY • A FEW SELLERS • CORRUPTION • PAYOFFS RECEIVED BY INDIVIDUALS TO TRADE AT NON-MARKET PRICES • TAXATION • USED TO GENERATE REVENUE AND TO REGULATE TRADE.

  26. 2012 Corruption Perception Indexcpi.transparency.org/ Least Corrupted • 1 Denmark 17 United Kingdom • 1 Finland 19 United States • 1 New Zealand 20 Chile • 4 Sweden 58 Cuba • 5 Singapore Most Corrupted • 6 Switzerland • 7 Australia 174 Somalia 165Burundi • 7 Norway 174 North Korea 163 Zimbabwe • 9 Canada 174 Afghanistan 163 Equatorial Guinea • 9 Netherlands 173 Sudan • 11 Iceland 172 Myanmar • 12 Luxembourg 170 Uzbekistan • 13 Germany 170 Turkmenistan • 14 Hong Kong 169 Iraq • 15 Barbados 165 Venezuela • 16 Belgium 165 Haiti • 17 Japan 165 Chad

  27. INTERNATIONAL TRADEEVENT 29 • POLITICAL INTERFERENCE IN MARKETS • Sanctions (#1) • The prohibition of an economic exchange. • Autarky (#2) • When a country tries to produce everything. • Protectionism (#3) • Protection of domestic industries from international competition. • To protect infant industries • To give domestic industry a breathing room when market conditions shift or new competitors arrive on the scene. • When considered vital to national security • To ward off predatory practices by foreign companies or states https://www.youtube.com/watch?v=Y2X3KPilAt0

  28. INTERNATIONAL TRADEEVENT 29 • SUBSIDIES AND REGULATIONS - The two nontariff barriers that are the most fought about in the WTO are subsidies and regulation. • Subsidies are payments by a government to a domestic industry that allow it to lower its prices without losing money. (#4) • Regulations make it hard to distribute and market a product. https://www.youtube.com/watch?v=sDqGzMdhL1M

  29. INTERNATIONAL TRADEEVENT 29 • Effects of Protectionism (#5) • Positive • Help producers • May have a stabilizing effect under certain conditions. • Harley-Davidson v. Japanese competitors • Negative • Hurt consumers • Domestic industry may use it to avoid needed improvements

  30. INTERNATIONAL TRADEEVENT 29 • THE WORLD TRADE ORGANIZATION (WTO) (#6) • Global, multilateral IGO that promotes, monitors, and adjudicate international trade. • It has powers of enforcement • Membership has grown overtime • Rests on the principle of reciprocity http://study.com/academy/lesson/the-world-trade-organization-definition-history-purpose-members.html • Nondiscrimination (#12) • Most-Favored Nation • Trade restrictions imposed by a WTO member on its most-favored trading partner must be applied equally to ALL WTO members.

  31. INTERNATIONAL TRADEEVENT 29 • NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA) (#13) • 1994 U.S. – Canada – México agreement not to charge each other tariffs https://www.youtube.com/watch?v=rJl-w3ECwGY https://www.youtube.com/watch?v=DGeTZ4u2jbg

  32. INTERNATIONAL TRADEEVENT 30 • CARTELS (#1) • An association of producers or consumers, or both, of a certain product—formed to manipulate its price on the world market • Organization of Petroleum Exporting Countries (OPEC) • https://www.youtube.com/watch?v=oEm5OLcbW9Q • INTELLECTUAL PROPERTY RIGHTS (#2) • The rights of creators of books, films, computer software, and similar products to receive royalties when their products are sold. • https://www.youtube.com/watch?v=FsR5entRolM

  33. INTERNATIONAL TRADEEVENT 30 • ENFORCEMENT OF TRADE RULES (#3) • It depends on the reciprocity principle • “monkey see – monkey do attitude” • “You put tariffs, I will do the same” https://www.youtube.com/watch?v=OYFyumds_uI

  34. INTERNATIONAL TRADEEVENT 30 • Globalization is transforming money , business, integration, communication, environmental management, and the economic development of poor countries. https://www.youtube.com/watch?v=xPD477FuqtY

  35. INTERNATIONAL TRADEEVENT 30 • TYPES OF ECONOMIES • CENTRALLY PLANNED ECONOMY (#4) • A command economy. • Political authorities set prices and decide on quotas for production and consumption of each commodity according to a long-term plan, and international trade occurs at government-controlled prices. • MIXED ECONOMIES (#5) • They contain both government control and private ownership http://study.com/academy/lesson/what-is-a-mixed-economy-definition-characteristics-examples.html

  36. INTERNATIONAL TRADEEVENT 30 • RESISTANCE TO TRADE (#11) • Workers • Facing increasing competition • Human Rights • Improvement of working conditions • Environmental Groups • Undermining of environmental laws https://www.youtube.com/watch?v=IF9YsVpZnSE

  37. INTERNATIONAL TRADE THE END

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