Perspectives on International Relations: Power, Institutions, and Ideas: 2nd Edition: By Henry R. Nau, George Washington University

CHAPTER TEN: Trade, Investment, and Finance

Study

Trade, finance, and investment, the engines that drive the world economy, serve different purposes according to the three perspectives. For realist perspectives, they represent another arena in which the competition for power and dominance occurs. Realists are more likely to stress strategic trade and to use global markets to boost national defenses. Liberal perspectives, on the other hand, see them as opportunities for non-zero-sum gains and stress openness in both. Finally, identity perspectives are more likely to draw attention to fair trade and the potentially negative ramifications of unrestrained investment.

Study Questions

  1. What is comparative advantage, and how does this principle facilitate trade?


  2. What is the resource curse?


  3. What is the product life cycle, and how have its three cycles operated?


  4. What sparked the 2007—2008 financial crisis?