Dit is een samenvatting van het vak Economic Globalization gedoceerd door Prof. Samuel Standaert. Dit vak is een samenvatting op basis van de slides aangevuld met notities uit de hoorcolleges. Door middel van deze samenvatting behaalde ik een 20/20 op het examen (zie voorblad als bewijs). Veel succ...
,Inhoudsopgave
Chapter 1 – Globalization ............................................................................................................................................ 3
1.1 What is (economic) globalization ? .................................................................................................................... 3
1.2 Is globalization good ? ....................................................................................................................................... 3
1.3 Globalization over time...................................................................................................................................... 4
1.4 Who trades with whom ? (Gravity model) ......................................................................................................... 5
1.5 What’s next ? .................................................................................................................................................... 6
Chapter 2 – The classical trade theory ......................................................................................................................... 7
2.1 Absolute advantage ........................................................................................................................................... 7
2.2 Comparative advantage ..................................................................................................................................... 8
2.3 How are wages and prices determined ?............................................................................................................ 8
2.4 Misconceptions about comparative advantage ................................................................................................ 10
2.5 Comparative advantage in real life ................................................................................................................... 10
2.6 Should Nigeria strive for self-sufficiency in food ? (EXTRA INFO IN PPT) ........................................................... 11
Chapter 3 – Neoclassical models of trade .................................................................................................................. 13
3.1 Labour and trade ............................................................................................................................................. 13
3.2 Multiple factor economy ................................................................................................................................. 13
3.3 Market equilibrium in autarky ......................................................................................................................... 14
3.4 The Heckscher-Ohlin model ............................................................................................................................. 15
3.5 Trade and the distribution of income ............................................................................................................... 17
3.6 The Heckscher-Ohlin model in real life ............................................................................................................. 17
3.7 If not trade , what is to blame ? ....................................................................................................................... 18
Chapter 4 – Modern trade theory ............................................................................................................................. 20
4.1 Why do we need more trade theory ? ............................................................................................................. 20
4.2 Why do countries trade what they already have ?............................................................................................ 20
4.3 Internal economies of scale ............................................................................................................................. 20
4.4 External economies of scale............................................................................................................................. 22
4.5 Firm heterogeneity & trade costs..................................................................................................................... 22
4.6 Dumping ......................................................................................................................................................... 23
Chapter 5 – FDI and MNE .......................................................................................................................................... 24
5.1 The basics of FDI and MNE .............................................................................................................................. 24
5.2 OLI (Ownership Location Internalization) ......................................................................................................... 25
5.3 FDI and Welfare ............................................................................................................................................... 25
Chapter 6 – Migration ............................................................................................................................................... 27
6.1 Introduction on the migration phenomenon .................................................................................................... 27
6.2 Migration on the rise: evolution and composition ............................................................................................ 27
6.3 The migration decision and location choice ..................................................................................................... 28
6.4 Implications for the country of destination ...................................................................................................... 30
6.5 Implications for the country of origin ............................................................................................................... 31
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,Chapter 7 – The instruments of trade policy .............................................................................................................. 32
7.1 How does the government intervene in trade ? ............................................................................................... 32
7.2 Export supply and import demand ................................................................................................................... 32
7.3 The impact of tariffs ........................................................................................................................................ 33
7.3.1 Small country case .................................................................................................................................... 33
7.3.2 Large country case .................................................................................................................................... 34
7.4 Measuring the effective protection rate ........................................................................................................... 35
7.5 Non-tariff barriers ........................................................................................................................................... 35
Chapter 8 – The political economy of trade policy ..................................................................................................... 38
8.1 The case of free trade ...................................................................................................................................... 38
8.2 Arguments used against free trade .................................................................................................................. 38
8.3 How does trade policy come about ? ............................................................................................................... 41
8.3.1 Political modals of trade policy ................................................................................................................. 41
8.3.2 Strategic trade policy ................................................................................................................................ 42
Chapter 9 – Regional integration ............................................................................................................................... 43
9.1 What are regional integrations agreements ..................................................................................................... 43
9.2 Economic integration agreements ................................................................................................................... 43
9.2.1 Static analysis: Viner ................................................................................................................................. 44
9.2.2 Dynamic: new regionalism ........................................................................................................................ 45
9.3 RIAs in the global system ................................................................................................................................. 45
9.3.1 The spaghetti bowl ................................................................................................................................... 45
9.3.2 Russia ....................................................................................................................................................... 46
Chapter 10 - Trade and development ....................................................................................................................... 47
10.1 Trade as a pathway to development .............................................................................................................. 47
10.1.1 The Asian tigers ...................................................................................................................................... 47
10.1.2 Not all trade is good ................................................................................................................................ 48
10.2 Trade and labour standards ............................................................................................................................... 48
10.3 Trade and the environment ........................................................................................................................... 49
Chapter 11 – GATT and the WTO ............................................................................................................................... 50
11.1 A brief history ................................................................................................................................................ 50
11.2 WTO principles .............................................................................................................................................. 51
11.3 WTO Structure............................................................................................................................................... 52
11.4 Examples of WTO cases ................................................................................................................................. 52
11.5 The future of the WTO ................................................................................................................................... 53
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, Chapter 1 – Globalization
1.1 What is (economic) globalization ?
• Globalization = anything that facilitates expanded economic interaction across countries
o E.g.: Phoenicians developing square-rigged sails to trade in Mediterranean , European explorers , silk
road …
• Definition from Deardorff and Stern :
o Globalization :
▪ Increase in international transactions in markets for goods, services and factors of
production (labor & capital)
▪ Growth and expanded scope of international institutions and organizations including
multinational corporations and international institutions (UN, World Bank, IMF, WTO)
o Globalization =
▪ 1. Increased trade
• Containerization of trade
• Key aspect through which the world economy became more globalized
• Became vital to many companies and countries worldwide
▪ 2. Increased foreign investment
• International economics are more than just trade in goods/services
• Also FDI has spurred (stimulated)
▪ 3. Increased migration
• Labor migration …
• Increased international travel (temporary/permanent) has helped globalization
• Globalization brings diverse cultures into everyday contact
▪ 4. Increased political connections
• Countries became more politically connected
• Work together to enact trade agreements & open borders to factor movement
1.2 Is globalization good ?
• Yes, because voluntary (not always -> slavery) exchange between 2 entities -> lower prices , higher quality ,
higher efficiency , higher welfare
• No, because not everyone wins & this assumes that the market works well
• BUT overall : people gain
• Why study economic globalization ?
o National governments often restrict international movement of goods/services and factors of
production via boycotts, quota …
▪ Especially movement of production factors (immigration)
▪ BUT these countries prefer free flow within their borders so why not international …
• Globalization = a controversial process
o The “Battle of Seattle” = meeting of World Trade Organization that was protested by thousands of
people opposed to globalization -> turned violent
o Mostly low-skilled workers were against globalization
Proponents Opponents
• Lifted many out of poverty with jobs (China) • Unfair working conditions and exploitation of
• Increased students studying abroad the poor & the environment
• Helps people communicate • Outsourcing causes job loss in wealthy
• Increases speed with which aid agencies can countries
respond to natural disasters • Western culture destroys local cultures
• Helps availability and affordability of advanced
medicine
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