Schools of Thought
This school of thought says that the most important actor is the state
What is Mercantilism?
The ease with which owners of factors of production can move between industries in the domestic economy is called this
What is inter-industry factor mobility?
This term describes the amount of land, labor, and capital a country has
What are factor endowments?
This kind of cleavage is found in a capital rich country with high land/labor ratio
What is class cleavage?
This country has the absolute advantage in producing wine if Spain can produce 3 bottles in one worker day and Italy can produce 2 bottles in one worker day
What is Spain?
This school of thought says that the state is the instrument of capitalist class and uses state power to sustain capitalism system
What is Marxism?
What are abundant factors?
This model argues that comparative advantage arises from cross-national differences in factor endowments
Hecksher-Ohlin model
This resource (singular) is abundant in a capital-poor country with high land/labor ratio
What is land?
It costs Texas 3 worker days per gallon of oil and North Dakota 7 worker days per gallon of oil. This state has the absolute advantage in producing oil.
What is Texas?
This school of thought says that the proper objective is to enhance social welfare
What is Liberalism?
According to Rogowski (1987), if you benefit from a policy, you will want to do this.
What is keep the policy in place?
This theorem says that in open economies, international trade will cause the price of the factors of production to equalize
Stolper-Samuelson Theorem
These resources (plural) are abundant in a capital rich society with a low land/labor ratio.
What are capital and labor?
It costs Texas 5 worker days to produce a gallon of oil and 8 worker days to produce one pound of beef. This is the relative cost of beef.
What is 8/5 gallons of oil per 1 pound of beef
This school of thought emerged in Britain during the 18th century, and says that international economy offers benefits to all countries
What is Liberalism?
According to Rogowski (1987), people who have what have the ability to make political change?
What is wealth and/or high income?
The kind of advantage that occurs when a country benefits from trade when it produces a particular good at a lower cost than it costs to produce the good in any other country
What is absolute advantage?
In a capital poor nation with a high land/labor divide, this is the effect of less free trade on labor and capital
They rise
The relative cost of corn in Texas is 1 ear = .5 pounds of beef. The relative cost of corn in Kansas is 1 ear = .2 pounds of beef. This state has comparative advantage in producing corn.
What is Kansas?
This school of thought says that the image of IPE is conflictual: countries compete for desirable industries and engage in trade conflicts as a result of competition
What is Mercantilism?
These kinds of people are more likely to organize collective action to achieve the desired policy outcome (Rogowski 1987)
political entrepreneurs
The advantage that occurs when a country benefits from trade if it can produce a good more cheaply than it can produce other goods
What is comparative advantage?
These resources (plural) are scarce in a capital poor country with a low land/labor ratio
What are land and capital?
According to David Ricardo (1987), this is why free trade is good for society.
What is comparative advantage?