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Thread: Help with International political economy question.

  1. #1 Help with International political economy question. 
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    Hi guys, im currently studying and really struggling with my IPE module, and Im trying to formulate a plan for an essay which I have to do(before tomorrow). Any help or thoughts on the situation would be much appreciated.


    My essay question is - Are the benefits of international trade received by “developed” and “developing” economies comparable?


    Cheers guys.


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  3. #2  
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    I use the USA/ China for answering the question the way (I) see it.
    and in my mind, developed = high wages, high valued curency , and developing = low wages, low valued currency (though this statement may not be accurate)


    I would answer the question ? NO.



    I feel the only benifit to the developed country, is getting manufactored goods at very low prices.


    While the benifits for the developing country are many,

    a large revenue stream of the developed countrys high valued curency, into the developing country
    a building of internal infrastructure , that produces the low priced goods
    the building of modern transpertation routes within the developing country, to get the cheaply priced goods out, and the jobs this creates
    many new manufactoring jobs created in the developing country
    ex. ex.


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  4. #3  
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    Quote Originally Posted by wesson124 View Post
    Hi guys, im currently studying and really struggling with my IPE module, and Im trying to formulate a plan for an essay which I have to do(before tomorrow). Any help or thoughts on the situation would be much appreciated.


    My essay question is - Are the benefits of international trade received by “developed” and “developing” economies comparable?


    Cheers guys.
    I know it does not help your paper but, I am bored..

    The United States is unique because the US dollar is the world's trade currency and just about every country has followed the US model of printing money hand over fist. However, the new US dollar is still an infant (only about 50 years old) and its purchasing power is far weaker than its last currency and this new currency (with political policies) continues to weaken in its manufacturing ability and purchasing power at an astonishing rate. After all, it is all about manufacturing and purchasing power, right?

    Developing countries have increased their manufacturing and purchasing power and the United States has decreased in its manufacturing and purchasing power.

    IMO, the benefits or negative outcomes in international trade materialize due to the policies (both domestic and international) that each nation has for itself.

    I hope you did well!
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  5. #4  
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    There's this myth that says that cheap manufactured goods are beneficial to the economy. All evidence points to the contrary.

    Even without globalization, the tendency of automobiles to survive longer before needing to be scrapped due to engineering improvements over the last few decades has put automobile manufacturers in quite a bind. They need repeat customers, and people are increasingly happy to just keep right on driving their old jalopy. The computer industry thrived in the late 90's because processor speeds were doubling about every 2 years, making the old models obsolete and prompting consumers to come back and buy another. Now the speeds have remained constant for a good long time, making customers again happy to keep up their old computers, and the industry is having to branch out in search of other types of demand, such as the various kinds of i-pads. They're not dying out, but it's certainly a slower business than it was.

    It's totally idiotic to think that other methods of eliminating demand for domestic production would yield good results.
    Some clocks are only right twice a day, but they are still right when they are right.
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  6. #5  
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    I am in awe of your ability to draw the wrong conclusion from the right facts. You should go into merchant banking.
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  7. #6  
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    Kojax, did you ever stop to think that somebody who doesn't have to buy a new car might spend the money on something else? And that whoever is selling the something else, might be having a better sales year than they would if people were spending the money on a car?
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  8. #7  
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    Kojax doesn't usually stop to think.
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  9. #8  
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    Quote Originally Posted by Harold14370 View Post
    Kojax, did you ever stop to think that somebody who doesn't have to buy a new car might spend the money on something else? And that whoever is selling the something else, might be having a better sales year than they would if people were spending the money on a car?
    That would be sound logic if we assume there were no such thing as inflation. It's just as possible that once our consumers all have more money free to spend, and no need to buy a car with it, the prices of everything else will simply rise to make up the difference.

    If the rise in price occurs in a section of the economy that is capable of increasing its production to fill the new demand, then that's good. More goods will be produced to meet the new demand until oversupply of the good brings the price back down to where it was (with more goods being produced, instead of the same number at a higher price), so each consumer is getting more goods.

    Trouble is.... not every section of the economy is like that. If the price of something like rent rises, then part of rent is real estate, and the supply of real estate can never go up no matter what you do (short of expanding into the ocean.) Higher rent prices don't trigger production of more land. It can fuel a housing boom (trying to make more of the existing land usable) , which is exactly what we saw happen at the start of the current recession, but those run their course. You can't keep building new houses forever.

    There is no automatic mechanism that forces the money saved by reducing production of one good to go to production of another good. If there were, then your argument would be spot on, but since there isn't, we have no justification for assuming all of the money will go into increasing someone else's sale year. It's likely that some of it will and some of it won't. (Whereas before, all of it was.) You see how that's a bad change? It's like using electricity to heat a steam engine to produce electricity. You started with energy that was at low entropy (mostly recoverable to do work with), and you end up with heat + energy at low entropy. It's a bad exchange.
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  10. #9  
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    [QUOTE=kojax;315893]
    Quote Originally Posted by Harold14370 View Post
    You see how that's a bad change? It's like using electricity to heat a steam engine to produce electricity. You started with energy that was at low entropy (mostly recoverable to do work with), and you end up with heat + energy at low entropy. It's a bad exchange.
    No, you are the one proposing to bootstrap the economy by making cars that fall apart so people have to buy more cars. That is what is equivalent to the perpetual motion machine.
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  11. #10  
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    Well, preferably automotive technology would simply be progressing at such a rapid rate that the old cars became obsolete and nobody wanted to drive them anymore, but yeah. That's the basic idea.

    Any productive potential that isn't used right now today (or moth/year...etc) in an economy is wasted. It's lost. Most types of wealth are impossible to store for very long unused. Grain spoils. Houses rot. Metal rusts. If you don't plow a field this year, you can always plow it next year, but you can't get back this year's lost crop. The economy slows down when people stop producing.

    Money has the problem that it can be saved in a way that real wealth cannot, and that ability paints an inaccurate picture of the physical economy. Then people believe the picture because their instrument for interpreting it (money) tells them a falsehood, and things go downhill from there. They convince themselves that by saving the effort to make something now, they're putting it off until later, but really they're just plain losing it.

    If people keep their old cars instead of buying a new one every 5 years, the productive potential goes unused, and unless we're lucky enough for it to get directed elsewhere (not guaranteed to happen), it's simply lost. If instead, they buy new cars every 5 years, the productive potential doesn't go to waste, and they have new cars to drive. You pretty much break even either way. An unemployed worker sitting at home and doing nothing is just as much a waste as an employed worker who's busy making a car that didn't have to be made. Equal waste. However the social consequences of the second option work out better.
    Some clocks are only right twice a day, but they are still right when they are right.
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  12. #11  
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    Quote Originally Posted by kojax View Post
    The economy slows down when people stop producing.
    I believe it was Calvin Coolidge who said "When more and more people are thrown out of work unemployment results."

    You're Presidential material my boy.

    (Although I prefer Yogi Berra: "When you come to a fork in the road you should take it.")
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  13. #12  
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    I think I'm getting into one of those rutts, where I think I'm explaining myself clearly, but I'm clearly not.

    Some concepts work like this:

    1) - They might a lot of sense if you don't think about them.

    2) - They stop making sense if you do think about them.

    3) - They start making sense again if you continue thinking about them long enough to connect all the dots.

    The trouble when you're at #2 is determining whether the other person is at #1 or #3. (#3 may not exist for some ideas.)
    Some clocks are only right twice a day, but they are still right when they are right.
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  14. #13  
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    I think you stubled into one of the deep fundamental problems with our 19th-20th century capitalistic economic model--it encourages unsustainable waste--something can no longer ecologically afford to do.
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    Quote Originally Posted by Lynx_Fox View Post
    I think you stubled into one of the deep fundamental problems with our 19th-20th century capitalistic economic model--it encourages unsustainable waste--something can no longer ecologically afford to do.
    It surely does encourage unsustainable waste/use... The only good that will come from it in the end though will be the fortunes to be had and made by those that understand and know which unsustainable goods, products and materials will be strained, overused or depleted before most catch on and/or before most get smacked upside the head by it.
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  16. #15  
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    Quote Originally Posted by Lynx_Fox View Post
    I think you stubled into one of the deep fundamental problems with our 19th-20th century capitalistic economic model--it encourages unsustainable waste--something can no longer ecologically afford to do.
    Yeah. In a sense, it's a great big collision course. On the one hand, every minute that a worker isn't working is wasted. On the other hand, if the worker's line of work requires natural resources to be used (as most forms of production do), then we can expect to be consuming our natural resources at an alarming rate if we keep that worker busy.

    No society can afford to sustain a large idle workforce, and our planet's natural resources are finite, so that leaves the only workable solution to both problems as being population control. It's the only solution wherein full employment wouldn't overtax resources.
    Last edited by kojax; March 29th, 2012 at 03:50 PM.
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