POL208Y1 Lecture 1: International-Trade-and-Globalization
7 Feb 2017
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Economic theory: free trade (absolute advantage) benefits all (smith); comparative advantage (ricardo) Why? afraid. trade: domestically: stopler/ samuelson, internationally: terms of trade. Hegemony suggests stability and security: beneficial for trade. A hegemon would set trade rules that benefit its interests. A hegemon could use its power to force other countries to open up. Hegemons are too big to fail not sensitive or vulnerable so they(cid:495)re not. A hegemon enjoys comparative advantage would benefit most from free. A hegemon solves the prisoner(cid:495)s dilemma by institutionalizing freer trade . In time od crisis a hegemon can prevent (cid:498)beggar thy neighbor(cid:499) policies willing to pay the cost of preserving it thus paying for (cid:494)collective goods(cid:495): Since the hemeon benefits from the stability of the current system it will be enforcing the rules and preventing defection policing, enforcing rules. The most open countries are small countries e. g. ireland then switzerland.
