International Trade and Economics - Research Paper Example

Section/# Thematic Overview International trade and economics is extraordinarily broad topic that in encompasses nearly every aspect of economic theory, practical business application, sociology, and issues concerning international politics. As a direct function of the fact that trade and the existing state of economic interdependence that the world finds itself in creates a situation of such complexity, the following analysis will focus upon its three core themes that were addressed within the reading that has been assigned. However, before delving directly into these themes, examining them within their current context, and extrapolating them with respect to additional literature and the means through which these themes have an impact upon economics and trade, a cursory overview and analysis of these articles will be provided. This summary review will serve as a means of providing the reader with an effective baseline of knowledge that they can then leverage to understand and engage the themes which will be discussed at further length within the preceding pages. The first article, entitled “Access to Protection: Domestic Institutions and Trade Policy in Democracies”, provides a baseline of understanding with respect to promoting the realization that protection of certain aspects of the economy is a role in which individuals, states, and institutions are intrinsically interested in accomplishing. The underlying rationale that can of course be given for this is with respect to the fact that freely competing within the open market, with any particular economic good, represents a situation in which the undercutting power of competition could easily see profit margins decreased or if that operate entirely. As such, the authors place a great deal of emphasis with regards to understanding the role in which parties in governance, districts within an electorate, the nature of the vote, and other such institutions impact upon protection. Further, the ultimate hypothesis, which is eventually proven, has to do with the fact that once these factors are ultimately controlled for, they are no longer exhibited as having a profound impact with respect to trade policy. Beyond merely coming to a further realization with respect to the impact of protection of economic goods or services, and an analysis of the intervening macro economic theory that helps to define these, the article is also able to give a fairly accurate baseline with relation to the precursors of protection and “protectionism”. Understanding these precursors is of course a vital component in helping the reader to understand the dynamics of global economics. Whereas it might be hoped that certain regions of the world will ascribe by a laissez-faire economic model, this particular level of non-protection exists only as a theoretical figment of imagination within existing economic literature. The second piece of literature that will be discussed and analyzed within this brief analysis is with respect to Kerry Chase’s book entitled Trading Blocks, States, Firms, and Regions in the World Economy. Whereas international trade is oftentimes been understood in terms of the macro approach, the book in question, much as the title implies, reveals the fact that states, firms, regions, and trading blocs can have a profound impact with regards the way in which a particular region/state develops its economic base and chooses to integrate with the remainder of the world/regional economy. Rather than devoting lengthy discussions with respect to whether or not each of these elements has a profound impact upon the development of global economics, the authors instead utilize case-by-case examples and discussions of the way that each of these factors has impacted upon the current exhibition of global economics to help to prove the broader point. From both of these readings, it is abundantly clear that three particular realities are discussed at length. These are as follows: trade blocks, protection/protectionism, and the role of proportional representation. As a function of understanding these themes to a more full and complete degree, the following analysis will engage with a discussion of how each of these impacts upon global economics and the manner through which development throughout global economics is predicated upon these three core themes. Protection is very much an aspect of global economics that takes place on a continual basis. Even superpowers such as the United States, operating within NAFTA, will utilize a degree of protectionism as a means of bolstering domestic production and seeking to offset potential job losses and economic difficulty that might be felt if the price of goods and availability were ultimately what determined their demand. Additionally, a core theme that is found in both readings has to do with the level and extent to which trade blocs currently define the world in which we live. Whereas it is of course possible for economic interaction to take place within a different model, trade blocs allow individual nations to have a guaranteed set of respective influence and normalized tariffs that promote stability within the market. Prior levels f integration that have been noted in the past saw a frenetic situation in which different nations economically integrated but within very short term levels; providing a situation in which the prisoner’s dilemma was a very profound aspect of global trade and regional commerce. Finally, the third theme that is common within these two works is with respect to global economic interaction is what the authors describe as proportional representation (PR). Ultimately, this factor takes into account the different views, needs/wants, and motivations by which international economics is constrained/influenced. Ultimately, the influence of individuals and groups of individuals, i.e. corporations and others, had a profound impact with respect to the way in which economic policy and integration with the remainder of the world takes place. As a direct result of this, both of the authors reference the fact that proportional representation is not something that should be counted as having little if any impact upon the way in which global interaction and trade takes place. Instead, these issues are vitally important to understanding the dynamics and personal/shared interests that individuals are able to promote within the market. Naturally, the disproportionate level of representation that certain entities and individuals are able to have oftentimes creates a situation in which a lobbied group of powerful interests is able to shift the dynamics of trade in one direction or another. Without going into a high level of detail, both in the articles references the fact that this level of disproportionate power is one of the primary motivators and causes of sudden shifts/unexpected changes in international trade and regional economic integration. Ultimately, one of the key points of the authors reference is with regards to the fact that the in the Second World War saw a complete realignment with regards to the power dynamics of the world. As a result of this shift, the United States and much of Western Europe aligned itself with a free market capitalist system whereas the Soviet Union and many parts of the remainder of the world aligned themselves with socialist communism. As a result of this bipolar powershift, the capitalist nations throughout the world realize that one of the only ways to ensure that wealth generation and sustained growth could proliferate was by engaging in a system of capitalism that prized reductions in trade barriers and liberalize nations in trade. The authors further specify the fact that this desire to reduce trade barriers and liberalize trade was ultimately the impetus which helps to give rise to such global entities as GATT, WTO, and the World Bank. Yet rather than each and every nation throughout the world integrating their economies and seeking to provide goods and services with little to no trade barriers, a somewhat different dynamic has been realized. As such, the difference between theory and practice is denoted by the authors with respect to the way in which different trade blocs and trade alliances have developed between the regions and entities throughout the globe. As such, whereas the world might have been previously defined based upon religion and/or ideology, nationality, ethnicity, or any other litany of different qualifiers, the modern world has largely been defined with regards to which nations agreed to a level of unimpeded trade. What this has ultimately affected is a situation through which the world has come to be redefined based upon trade and not based upon many of the other qualifications that had previously constrained and defined the way in which nations have interacted historically. After the collapse of the Soviet Union, this particular trend has only been increasing as more and more nations throughout the globe seek to develop their own trade blocs and alliances in something of a macro form of protectionism. Evidence of this can of course be seen with regards to the way in which the EU, NAFTA, and ASEAN treaties now exists which helped to promote trans regional trade and block the advances of true international liberalism that might otherwise helped to differentiate and grow these respective economies (Chase 9). As a result of this particular approach, the reader can be quick to understand that global economics has come to be partially defined by the way in which different blocs integrate with one another. As such, the dynamic changes and shifts that are oftentimes evidenced can be definitively traced to the internal engagements within the politics of a single state/country and other shifts can be traced to the external dynamics and political integration between states. Moreover, the authors note the fact that many individuals view the current exhibition of global interaction and trade blocs as something akin to a neo-mercantilist system. Although this is not quite the case, the comparisons nonetheless exist and should not be dismissed out of hand. As the more wealthy nations, represented by powerful trade alliances and blocs are able to outsource their unskilled labor and raw material extraction to poorer nations, the benefits of these inputs are realized on both entities. Whereas the neo-mercantilist would point to the fact that these nations are being taken advantage of, the reader need only to consider the case of the People’s Republic of China or Japan to realize the ways in which an economy can utilize this transitional stage as a means of building itself into a more economically powerfully and dynamic system; one that is able to develop and ultimately divorce itself from the provision of cheap unfinished goods towards one that relies upon the same outputs that more wealthy nations had previously leveraged it for. From the information that is thus far been engaged it is patently obvious that a number of dynamics help to mold and shift the way in which international integration and trade cooperation takes place. If it were the responsibility of this particular author to define one of the three pervasive themes that has herein been discussed as the most powerful, it would necessarily have to be that of the trade blocs. Ultimately, since the conclusion of the second world war, the power and market dynamics that different trade blocs are able to bring to bear have allowed for the growth and development of different regions of the world, at different speeds, and with different partnerships. Rather than an individual nations population and industry being dependent upon the production capacity and consumption that they represent in and of themselves, the provision and widespread distribution of trade blocs has allowed a unique dynamics of globalization to be represented within the current model. Furthermore, nations that might not otherwise be as competitive or have the degree of clout and benefit within the broader market are able to exhibit a wide range of power within the institutions that have been broadly defined as trade blocs. Naturally, the power and impacts that global economics is able to have upon the lives of individual stakeholders, as well as the groups of decision-makers within industry and production, has increased exponentially over the past several decades. The combined power of globalization and the means through which economic power is no longer held within the hands of a few moneyed individuals has created a situation that is much more complex and diverse. As a direct result of this, the analysis that has been conducted only helps to scratch the surface of the core causal mechanisms that help to influence global economics. Work Cited Chase, Kerry A. Trading blocs states, firms, and regions in the world economy. Ann Arbor: University of Michigan Press, 2005. Print. Read More