For decades, trade has been an important driver for economic growth and well-being as well as job creation. Over the past decades, it helped to lift billions of people out of poverty worldwide, and, in some cases, promoted political freedom along with economic freedom. However, these times seem to be over. Great power politics, a competition of ideas and systems, cold and hot conflicts as well as wars threaten to divide the world into new blocks – large autocracies on one side and liberal democracies on the other. Trade is more and more seen from a security lens: as source of national vulnerabilities on one hand side, and as coercive, strategic instrument on the other. This will massively impact trade flows, accelerating the re-regionalization and re-nationalization of value chains, which started a few years ago and gained momentum during the Covid-19 pandemic, also fueled by the power competition between the United States and China. At the same time, the WTO, which is already fragile, is threatened to be weakened even further – at a time when a strong institution is more important than ever.
Following up on the introductory economics classes of the first semester, “The Political Economy of World Trade” aims at providing a hands-on approach to the analysis of international trade relations. This course has a strong policy orientation, using current issues and challenges in trade policy-making as the starting point of each session. Economic research and theoretical elements will be studied to come to concrete policy options. Our class features five sections: 1. drivers of world trade; 2. the political economy of trade policy-making; 3. the multilateral trading system; 4. preferential trade agreements, 5. a critical look at trade.
We start our class with an introduction to trade theory, asking why countries trade. We then venture into empirics, identifying the drivers of trade. In this context, we will analyze global and regional trade patterns. We will also learn about the effects of trade/trade liberalization on economic growth and development. The second section of our class is devoted to the political economy of trade policy-making. We will study different theories and explanatory approaches and apply these to U.S., EU and Chinese trade policy-making. Subsequently, in the third section of our class, we will study the WTO and analyze its legitimacy and effectiveness. We will learn about the WTO’s Doha Development Round and explain why negotiations have failed. Furthermore, we will study WTO dispute settlement, its legitimacy and effectiveness. In the fourth section of our class, we will take a close look at preferential trade agreements and study whether PTAs are a stepping stone or a stumbling block for the multilateral trading system. Last but not least, we will take a look at the effects of trade on growth and development as well as trade and sustainability.
This course is for 2nd year MIA, MPP and MDS students only.
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