A Discussion About The Trajectory Of Economic Cooperation

In a discussion about the trajectory of economic cooperation, the default prediction may be that we will see the international community move toward economic cooperation because it facilitates freer trade, which benefits all. After all, the theory of comparative advantage tells us that nations will achieve greater economic growth by directing factors of production toward abundant resource industries and trading with other nations for goods derived from resources scarce to them, and this trade requires cooperation to arrange and regulate. However, the global political economy presents complexities and nuances that challenge this generalization. Many of the determining factors of the movement, or lack thereof, toward economic openness†¦show more content†¦Both of these steps focus on trade negotiations and the facilitation of free trade through the lowering of tariffs and resolution of trade disputes. (citation?) Factors leading toward or against free trade must also lead toward or against economic cooperation. Of prime importance is the public support, or lack thereof, of a state’s expansion of trade with others. Within nations, those who gain from trade expansion will favor it, while those who lose will favor protectionism. Therefore, individuals in either group form political alignments that go on to affect a state’s engagement or disengagement in economic cooperation. One way of examining the winners and losers of free trade is through the Stolper-Samuelson theorem. Wolfgang F. Stolper and Paul A. Samuelson explain that owners of abundant factors benefit from free trade while owners of scarce factors lose. This owes to the principle of comparative advantage, whereby, when trade expands, national markets transfer land, labor, and capital toward those industries relying on abundant factors, which produce commodities more efficiently. These industries become export industries. Conversely, those industries relying on scarce factors will lose land, labor, and capital in favor of purchase of these goods abroad, where factors are more abundant (Stolper and Samuelson). Thus, these