Download National Power and Foreign Trade

NS3040 Fall 2016
National Power and Foreign Trade
Trade and National Power I
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Albert O. Hirschman, National Power and Foreign Trade
German Trading Methods Under National Socialism
Try to capture most of the gains from trade
Principles of a power policy using foreign trade as its
instrument
• 1. Policies relying on the supply effect of foreign trade
and trying to insure its working even in times of war
• Concentrate imports on goods needed for the war machine
• Accumulate large stocks of strategic materials
• Redirect trade to neighboring political friendly countries
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Trade and National Power II
• 2. Policies relying on the influence effect of foreign trade
• Policies designed to make it more difficult for the trading
partner to dispense entirely with trade
• Increase trading partners’ gain from trade
• Develop exports in articles enjoying a monopolistic position in other
countries and direct trade toward them
• Direct trade to poorer countries
• Increase trading partners’ adjustment difficulties in case of
stoppage of trade
• Trade with countries with little mobility of resources
• Induce a wide discrepancy between the pattern of production for
exports and pattern of production for home consumption – Greece
groundnuts
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Trade and National Power III
• Policies designed to make it difficult for the trading
partners to shift trade to each other or to third countries
• In general direct trade toward the small trading countries
• With respect to the exports of the trading partners
• Import products for which there is little demand in other countries –
Brazil cotton
• Drive prices of the export products of the trading partner above
world prices
• By fostering high cost production
• With respect to the imports of trading partners
• Export highly differentiated goods creating consumption and
production habits -- spare part problem
• Develop trade on a bilateral basis
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