1. The Politics of International trade
International Trade and Commercial Policies Instructor: Stefano Manzocchi LUISS University - Rome
LUISS, Rome, 2013

2. LIBERALIZATION CAN RISE AND DECLINE, AND GLOBALIZATION AS WELL

3. THE POLITICAL SIDE OF GLOBALIZATION
BEYOND INFORMATION TECHNOLOGY, TRANSPORT COSTS, AND ECONOMIES OF SCALE..
THE RISE OF GLOBALIZATION HAS TO DO WITH POLITICAL PHENOMENA AS WELL.
NOTHING IS FOR GRANTED IN THE CURRENT STATE OF GLOBALIZATION: AS IT HAS RISEN, IT CAN DECLINE (see Chapter 5 of F. Guy’s “the Global Environment of Business)

4. GLOBALIZATION AND HEGEMONIC POWER
IN HISTORY, LONG PERIODS OF INCREASING GLOBALIZATION HAVE OFTEN OCCURRED WHEN THERE WAS ONE HEGEMONIC POWER (ANCIENT ROME.. THEN BRITAIN IN THE XIX CENTURY, US IN LAST CENTURY)
WHY? 1) A MORE STABLE SET OF RULES 2) AN INTEREST OF THE HEGEMONIC COUNTRY TO DEVELOP INTL EXCHANGES AND TO FAVOUR ITS PARTNERS

5. AND WHEN HEGEMONIC POWER DECLINES..?
CONFLICT TENDS TO INCREASE, EITHER ECONOMIC CONFLICT, OR MILITARY CONFLICT, OR BOTH
THE GLOBAL GROWTH ENVIRONMENT TENDS TO DETERIORATE AND PROTECTIONISM MAY EMERGE
BIPOLAR SYSTEMS CAN BE QUITE STABLE, MULTIPOLAR SYSTEMS LESS SO
TRADE AND FINANCE MAY BECOME MORE REGIONAL

6. The Change in World Economic Equilibria
% of World GDP
The Change in World Economic Equilibria
1820
1900
1950
2020
Source: Angus Maddison, University of Groningen 6

7. PRO- AND AGAINST- FREE TRADE FORCES ALWAYS CO-EXIST
THE 1800 CASE OF THE CORN LAWS, FAVOURING BRITAIN’S LANDLORDS AGAINST INDUSTRIALISTS
WHAT PREVAILS IS A MATTER OF TECHNOLOGY, IDEOLOGY AND INTERESTS
SMALL, ORGANIZED LOBBIES CAN PREVAIL OVER LARGE, NON-ORGANIZED INTERESTS (CONSUMERS)
HEGEMONIC POWERS TEND TO BE SUPERIOR IN TERMS OF ECONOMY AND TECHNOLOGY, HENCE FREE TRADE IN A CONVENIENT OPTION

8. AFTER HEGEMONY, IS LESS GLOBALIZATION POSSIBLE?
YES, IF LOW INTL COOPERATION LEADS TO LESS GROWTH, HENCE MORE SOCIAL CONFLICT WITHIN LARGE COUNTRIES, WITH A RISE IN PROTECTIONISM
YES, IF TOO MUCH MIS-MANAGEMENT AND FRAUD OCCURS (LIKE IN FINANCE IN RECENT YEARS)
NO, IF COOPERATION PREVAILS AND LARGE COUNTRIES RECOGNIZE THAT TRADE IS IN THEIR ADVANTAGE