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International economic policy

International Economic Policy: Book Review

The book reviewed in this essay, International Economic Policy in the

1990s, was to focus on some of the most recent concerns about international

trade. Its author, William R. cline, seems to have some good insights about the

topic as it seems that he researched, taught and lectured about this field of

study. The author tried to be as objective as possible and tried not to be

biased by referring to the different opinions about most of the issues he

handled. However, as it is really impossible to be totally unbiased, some biases

were to exist due to their necessity to form an argument. Furthermore, other

biases can be detected through his writings by remarking the aspects of

international trade that he examined, versus those he gave very small or no

weight at all.

There are many issues related to international trade that one can study,

however as it is usually the case, this book was to examine only some of them.

The author, in some parts of his book, was to concentrate on the question of

adjusting the US trade deficit against with Japan. He was to show the American

point of view that argues that Japanese terms of trade are unfair (104). Also he

was to refer to the North American Free Trade Agreement and reflect how it is

beneficial for Mexico (as first developing country to join the US and Canada)

which could not gain support from Europe to develop (as Europe was to

concentrate on its own further development and unity at the moment), and to how

the joining of Mexico was to benefit the US (and Canada) as it would open a

large market for the US as well as cheap labor (106). A good point made by him

was to show the prospects of incorporating more Latin American countries in

NAFTA (as this book was published in 1994) while saying that the Latin American

market "remains too small to compensate US exports for any broader loss of

markets in Europe, Japan, and elsewhere "(112). This conclusion might have led

him to have a closer look outside the US (and NAFTA) circle.

In a chapter of his book, he was to look at the "economic future of

Europe". He was to argue that an implication of the monetary union may be less

need for European countries to hold large reserves of dollars, as there will be

"reserves pooling". This may lead to an excess supply of dollars, and

consequently a "downward pressure" on the dollar (203). Unfortunately, this may

be the case, meaning that many economies will be affected. Another notice was

that the future of Europe is depending heavily on what will happen to the

"volcano" next to it, which is the former Soviet Union. This as the author

thought, should make Europe assist the former Soviet Union in order to assure

that Europe will not be affected by problems such as economic immigrants (204).

At his conclusion, he was to mention that Europe could play a similar role to

the world trade in the future as the one played by the US after the Second World

War.

He was to look at the Uruguay Round and have some interesting remarks

about it. There are two of them that seemed to me as interesting. The first one

states that major achievements in the Uruguay Round need not to be by further

liberalization of trade, but by the very fact that such a round reassured the

already given promise not to return to protectionism (231). As for instance

Japan was fearing "new protective barriers that might be otherwise wise set up

against Japan" if the round was not held (69). The second one was to show how

the areas in which the round was to seek further liberalization were divide into

two; categories: the first include services, intellectual property, and

investment, while the second included agriculture and textiles. He remarked that

developed countries agreed to liberalize the second category as to encourage

developing countries to liberalize the first category (68).

Another topic, that he was to view, was the effect on the relation

between global trade and its effects on the environment. He was optimistic about

the future of environment with further trade growth. He saw that economic growth

may be linked to more pollution problems, but this might be the case at first,

as the more the countries get more developed, the more they take better

"environment friendly" measures. Furthermore, he was to argue that there are

"two types of environmental damage: local reversible and global irreversible"

(210). He thought that no tough measures were needed to be taken against

countries engaged in the first kind as it did no harm to the rest of the world

and as it could be "repaired later. While he encouraged taking tough measures

against the later. He added that in case that a country may led to environmental

damage, only then economic sanctions or other measures could be legitimate if

peaceful means failed (211). His overall handling of the environmental issue was

well put except for some details, as he gave no clear enough guides to

differentiate between what is local reversible and what is global irreversible.

The author was to handle some major issues concerning global trade and

its prospects. However, as it seems to me it was to give little concern to some

major issues. For example, he failed to look at the North/South relations, as it

seems that the fact that the gap between the rich and the poor increased. Also,

poverty, huge increase in the third world's population, and the lack of water in

the future may lead to problems to the world as a whole and so serious steps

must be taken to contain a forthcoming disaster. Furthermore, the author should

have taken a serious look at the South East Asian countries (the Asian Tigers)

as it seems that they might become a real economic power (possibly with Japanese

supervision) and this will have enormous consequences on global trade. China,

with its huge power and huge potential economy and market, should have got his

attention as it might be a major economic power in the near future.

Overall, the author seemed to try to give various opinions, and rarely

mark his analysis as the "right" one. However, his neglecting of some major

aspects of international trades (as the economic powers, and the North/South

relation mentioned above) did not necessarily harm the book. This was due to the

good analysis he gave to the specific issues that he covered, and his attempt to

be objective

A review of:

Cline, William R. International Economic Policy in the 1990s. Cambridge: The MIT

Press, 1994.

Source: Essay UK - http://www.essay.uk.com/coursework/international-economic-policy.php



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