Theory and Practice of International Trade
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Post war saw the Bretton Woods system. He also wanted the cost of adjustment shared between countries with trade surpluses and deficits, so that countries with big surpluses would have to revalue their currencies, as well as deficit countries being forced to devalue. Instead, the Bretton Woods system gave the US currency - which was linked to gold. But the system was asymmetrical in the adjustment was borne by weaker countries who deflated. | Post war saw the Bretton Woods system. He also wanted the cost of adjustment shared between countries with trade surpluses and deficits, so that countries with big surpluses would have to revalue their currencies, as well as deficit countries being forced to devalue. Instead, the Bretton Woods system gave the US currency - which was linked to gold. But the system was asymmetrical in the adjustment was borne by weaker countries who deflated. | ||
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| + | ===Regionalism and world trade=== | ||
| + | Chaos in the 1930 led to protectionism and the rise of trading blocs. These took tow forms. RTA Regional Trade Agreements - EEC, NAFTA, EU as well as ones organized around empires (UK, France etc). RTA's accounted for fouth fifths of the world trade in 1969; mostly Europe then NA then Asia. Globalization can counteract regionalization through extra-bloc trading. | ||
| + | There is no evience according to Kitson that protectionism led to a collapse of multi-lateral trade but it is claimd (by GATT) then open trade would add $250bn a year to world trade although it is argued that would be skewed towards already industrialized states. | ||
| + | |||
| + | ===Lessons=== | ||
| + | One lesson is that regulatory frameworks needs to develop and adapt quickly and that IMF, World Bank etc need steamlining and stop using the tool of deflation as a condition of receiving aid. MF should stop the recommendation of privatization and accept that there are a variety of different social and industrial systems. | ||
Revision as of 13:54, 1 February 2011
Contents |
Trade and Growth
While the synchronization of national policies required under the gold standard conflicted at times...nonetheless policies aimed at sustaining and steadying effectiove demand would promote both internal stability and of exchange rates Ragnar Nurske 1944
The history of post war capitalism has been one of dominant powers in relative decline. The principal aim here is:
- Relationship between the growth of world trade and world output since 1970
- Evaluate the effectiveness of alternative international monetary regimes
- Consider the trend in world trade and power that will shape the future.
Trade and growth: the mechanism
Stable international monetary systems in the post war increased trade but did not have universally positive effects. Increased reliance on trade can make countries more vulnerable to external shocks.
Trade and growth: some evidence
Between 1870 -1913 there was almost continual increase in world trade and there was a high interdependence between world trade and growth indicated by a high correlation. Growth was less volatile than anytime other than the Bretton Woods system
Trade and growth: the role of trade policies regimes
Pre-1913 world trade was founded on the Gold Standard. It provided stability via automatic adjustments via gold flows. Some have questioned the stability - Not all countries kept to the rules of the game. Rather than balancing through flows of gold, failing economies adjusted via deflation and migration. An additional mechanism was protectionism. This allowed countries to adjust without recourse to deflation or exchange rate realignment.
The interwar period saw reemergence of the Gold Standard but it failed becuase a beggar thy neighbour deflationary type policies and was replaced by the use of independent and uncoordinated trade policies. The growth of world rade was limited by the domestic policies of the surplus countries. For instance the BoE maintained its surplus and prevented the loss of gold. In Germany its persistent payments deficit made it reliant on loans raising the debt burden that undermined creditworthiness. Ultimately the needed to deflate.
Post war saw the Bretton Woods system. He also wanted the cost of adjustment shared between countries with trade surpluses and deficits, so that countries with big surpluses would have to revalue their currencies, as well as deficit countries being forced to devalue. Instead, the Bretton Woods system gave the US currency - which was linked to gold. But the system was asymmetrical in the adjustment was borne by weaker countries who deflated.
Regionalism and world trade
Chaos in the 1930 led to protectionism and the rise of trading blocs. These took tow forms. RTA Regional Trade Agreements - EEC, NAFTA, EU as well as ones organized around empires (UK, France etc). RTA's accounted for fouth fifths of the world trade in 1969; mostly Europe then NA then Asia. Globalization can counteract regionalization through extra-bloc trading. There is no evience according to Kitson that protectionism led to a collapse of multi-lateral trade but it is claimd (by GATT) then open trade would add $250bn a year to world trade although it is argued that would be skewed towards already industrialized states.
Lessons
One lesson is that regulatory frameworks needs to develop and adapt quickly and that IMF, World Bank etc need steamlining and stop using the tool of deflation as a condition of receiving aid. MF should stop the recommendation of privatization and accept that there are a variety of different social and industrial systems.
