Question: Chapter 4: Questions

Assume there are 2 countries, the US and Malaysia, that can produce 2 goods, PCs and wheat; assume PCs are capital intensive and wheat is labor intensive; and assume the US is endowed with lots of capital and Malaysia is endowed with lots of labor.

1. Who are the winners and losers according to the factor model? Explain.

2. What is the Stolper/Samuelson theory?

3. What is the factor mobility assumption in the Factor Model? How does it differ in the Sector Model?

4. Given the different assumption about factor mobility, what does the sector model predict will be the result of trade? Who are the winners and losers?

5. A Society-Centered approach argues that "Trade policy reflects interest-group demands." What do the factor and sector models agree on? What do they differ on?

6. What is the evidence for the factor model? Sector model?

7. Once we determine certain groups have common interests to lobby for or against trade barriers, how might the Collective Action Problem prevent them from organizing? Explain the 3 Important Characteristics of Trade Politics that seem to support this is a problem.

8. The factor and sector models show how trade preferences are formed. And we have seen the challenges of organizing the interest into a demand for trade policy. But how the supply side work? In general, why does the electoral system and the number of veto players matter?

9. What part/statement/example/concept/story in the chapter did you like the most? Why?

10. What question do you think needs to be asked about this chapter that has not been?

Chapter 5: Questions

1. Contrast the State-Centered approach to the Society-Centered approach. What are the 2 central assumptions of the State Centered approach that contrast sharply with the Society Centered approach?

2. Define industrial policy. What is meant by a "strong state?" Is a strong or weak state more likely to implement industrial policy? Why?

3. Explain the Infant Industry justification for the industrial policy of raising tariffs to protect a new industry.

4. How does Strategic Trade Theory differ from the Infant Industry theory? Explain the impact of subsidies using the example detailed in Figure 5.1 pages 100-103.

5. Why is industrial policy used most in the high-tech industry? Previously, we had said comparative advantage determines what country should produce a good. What does Strategic Trade theory suggest?

6. What part/statement/example/concept/story in the chapter did you like the most? Why?

7. What question do you think needs to be asked about this chapter that has not been?