Exercise 2. Q1: When and where did the first wave of the industrial revolution evolve?

A

Q1: When and where did the first wave of the industrial revolution evolve? (p. 136)

(a) in the second half of the 18^th century in Great Britain

Q2: What was the second phase of the industrial revolution based upon? (p. 136)

(c) steel, petroleum, chemicals

Q3: Japan’s emergence as a dominant player in international markets can be traced back to … (p. 137)

(c) its superiority in manufacturing processes

Q4: The term “post industrial society” refers to (p. 138)

(b) the USA

B) In the following, you will find several statements. Decide whether these statements are true or false.

Q1: Lean production techniques were associated for the first time with the USA. (p. 136) FALSE (lean production is equated with Japan)

Q2: The sole importance of production costs in determining total costs has decreased substantially because of the increased significance of such non-manufacturing activities like design, distribution, and service. (p. 135-6) TRUE

Q3: Fortunately, no correlation between technological, economic or political leadership has been recognised yet by analysing historical trends. (p. 140) FALSE (just the opposite is the case: a strong correlation has been identified)

Q4: As developed nations enter the stage of postindustrialisation, developing nations can take their position in the sphere of more traditional manufacturing. (p. 138) TRUE

Q5: According to new economic theories, technology is a public good, therefore its monopolisation is impossible. (p. 138) FALSE (this is the argument of the neoclassicals)

Q6: In each phase of the industrial revolution, the dominant industrialiser(s) attempted to use its/their economic power to (re)shape international relations as well. (p. 136) TRUE

A) One of the most important (and interesting) statements of the introductory part of Chapter 8 is the following: from a historical perspective “trade has been regarded either as an international public good from which everyone benefits or a battleground in which there are winners and losers”. (p. 196)

Q1: What is the general perception of trade? (b) its effects are hard to judge clearly

Q2: What do we mean by an international public good? (a) a product or service accessible for all

Q3: What can be considered as an international public good? (b) clean water, fresh air

Q4: If we accept that trade is a “battleground in which there are winners and losers”, then we are also saying that (d) trade is a zero sum game

Q5: Who could be the primary winners of international trade? (b) consumers

B) Which of the following arguments belong to the free trade paradigm (that is, which would support the claim of free trade)? Note: There are more than one correct answers. (pp. 198-202)

(b) It permits national specialisation.

(c) It facilitates optimal resource allocation.

(f) By participating in free trade, economic wealth can be increased.

(g) It creates value added.

(j) It can maximise consumer choice.

(k) It will reduce the cost of production.

(n) It facilitates the efficient use of scarce resources.

(o) It enhances competition on the domestic market.

(q) It creates incentives to development.

C) Multiple choice questions (only one correct answer exists).

Q1: Which countries or groups consist of the three major trading blocs? (p. 198) (d) USA, Japan and the EU

Q2: What does the abbreviation “NAFTA” refer to? (b) North American Free Trade Agreement

Q3: According to the infant industry arguments, nations (b) should pursue protectionist measures in order to safeguard their infant industries.

Q4: Which group of countries claims the following: “trade violates human rights”? (p. 200) (c) developed economies

Q5: From the perspective of less developed countries, why is free trade seen sometimes as a threat? (p. 200) (a) Free trade has been equated with some kind of imperialism.

Q6: For economic nationalists trade protection is a tool of… (c) state creation and statecraft.

Q7: The term infant industry means that (p. 200) (a) the industry is protected from international pressures for a while and thereby it will become strong and competitive enough to survive when protection is eventually removed.

Q8: In what context has the word “voluntary export restraints” appeared in the text? (p. 200) (b) the car manufacturing industry in the USA and Japan

Q9: What induces developed countries to adopt measures in order to bloc free trade? (p. 200) (a) Free trade may cause a threat to jobs, wages and domestic welfare.

Q10: Since the benefits of protection accrue to a relatively smaller group of the society (namely a few producers), … (p. 202) (d) the producers will organise themselves in order to influence public policy for their interest.

D) Please decide whether the following statements are true or false.

Q1: In the last two centuries, trade protectionism has been a pervasive feature of the world economy. T

Q2: Nations are eager to open their markets to foreign companies, albeit they are quite often not willing to export to other countries. F

Q3: The shift from comparative trade theories to the so-called competitive advantage has undermined the arguments for free trade. T

Q4: Nowadays, trade issues are more complex since they are focusing not just on the economy, but also on culture or national sovereignty. T

Q5: The group which opposes free trade the most consists of the consumers. F

Q6: According to the advocates of free trade, it increases both national and global wealth. T

Q71: According to the advocates of free trade, trade protectionism never invites retaliation because it would cause armed conflicts in the world. F

Q8: Whereas the benefits of free trade are spread amongst the whole society, the benefits of protectionism accrue to a smaller segment only. T

Trade and trade policy

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