CHAPTER TEN
Trade and Investment

Study
Trade and investment, the engines that drive the world economy, serve different purposes according to the three perspectives. For realists, they represent another arena in which the competition for power and dominance occurs. Realists are more likely to stress strategic trade and to use trade and investment to boost national defenses. Liberals, on the other hand, see them as opportunities for non-zero sum gains and stress openness in both. Finally, the identity perspectives are more likely to draw attention toward concepts of 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 overall effect does trade have on jobs? Why?
   



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