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

(b) in the second half of the 17^th century in the USA

(c) in the first half of the 19^th century in Great Britain

(d) in the second half of the 18^th century in the USA

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

(a) steel and car-manufacturing

(b) nuclear power

(c) steel, petroleum, chemicals

(d) steam, textile and agriculture

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

(a) its extensive development and use of product innovations

(b) its large-scale product differentiation

(c) its superiority in manufacturing processes

(d) its increasing political and military power

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

(a) the developing nations

(b) the USA

(c) the Asian Four Tigers

(d) Korea

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?

(a) something that provides benefits for everyone

(b) its effects are hard to judge clearly

(c) a straightforward case

(d) something that provides more harm than benefit

Q2: What do we mean by an international public good?

(a) a product or service accessible for all

(b) a product that is produced by the public but consumed by foreign entities

(c) a privately owned international product

(d) a product that is consumed by foreigners

Q3: What can be considered as an international public good?

(a) free education

(b) clean water, fresh air

(c) a pair of shoes

(d) free speech, market profit

Q4: If we accept that trade is a “battleground in which there are winners and losers”, then we are also saying that

(a) trade is a positive sum game

(b) trade is a negative sum game

(c) trade is not a game at all

(d) trade is a zero sum game

Q5: Who could be the primary winners of international trade?

(a) governments

(b) consumers

(c) non-governmental organisations

(d) the state

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)

(a) It shifts income from consumers to the foreigners.

(b) It permits national specialisation.

(c) It facilitates optimal resource allocation.

(d) It gives a strong position for developmental states.

(e) It allows countries to protect their own producers.

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

(g) It creates value added.

(h) It impedes the international spread of know-how.

(i) It creates monopoly rents.

(j) It can maximise consumer choice.

(k) It will reduce the cost of production.

(l) It enhances anticompetitive practices.

(m) It reduces productivity.

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

(o) It enhances competition on the domestic market.

(p) It decreases global wealth.

(q) It creates incentives to development.

(r) It supports the idea of infant industries.

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

Q1: Which countries or groups consist of the three major trading blocs? (p. 198)

(a) Germany, Japan and the USA

(b) Great Britain, France and Italy

(c) China, Russia and the USA

(d) USA, Japan and the EU

Q2: What does the abbreviation “NAFTA” refer to?

(a) North Anti Free Trade Association

(b) North American Free Trade Agreement

(c) Non-Alcoholic Free Trade Area

(d) Not Allowed to Freely Trade Anywhere

Q3: According to the infant industry arguments, nations

(a) should adopt a laissez faire approach, thereby creating growth in the economy.

(b) should pursue protectionist measures in order to safeguard their infant industries.

(c) should adopt a free trade approach, thereby providing safeguards for their infant industries.

(d) should pursue a non-free trade approach, thereby providing a room for nourishment in case of their competitive sectors.

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

(a) developing economies

(b) less developed economies

(c) developed economies

(d) poor countries

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.

(b) Free trade brings in illegal products.

(c) Free trade is closely associated with the concept of developmental state.

(d) Free trade reduces employment.

Q6: For economic nationalists trade protection is a tool of…

(a) infant industry nourishment.

(b) wealth creation.

(c) state creation and statecraft.

(d) price reduction.

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.

(b) the industry is protected from national pressures for a while and thereby it will become strong and competitive enough to survive when protection is eventually removed.

(c) the industry is protected from national pressures for a while and thereby it will become strong and competitive enough to survive the world pressure.

(d) the industry is protected from international pressures for a while and thereby it will never 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)

(a) pharmaceuticals in the USA and Japan

(b) the car manufacturing industry in the USA and Japan

(c) the shipping industry in the EU, Japan and the USA

(d) international public goods in the USA and the EU

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.

(b) Free trade will reduce prices, thereby causing deflation in the domestic economy.

(c) Free trade may threaten globalisation.

(d) The absence of free trade triggers growth in the economy.

Q10: Since the benefits of protection accrue to a relatively smaller group of the society (namely a few producers), … (p. 202)

(a) consumers will fight with producers.

(b) politicians never listen to the wishes of producers. If they did so, voters would punish politicians.

(c) producers prefer free trade to protectionism.

(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

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