Module 19: Globalization and Protectionism
Section outline
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The world has become more connected on multiple levels, especially economically. In 1970, imports and exports made up 11% of U.S. GDP, while now they make up 32%. However, the United States, due to its size, is less internationally connected than most countries. For example, according to the World Bank, 97% of Botswana’s economic activity is connected to trade. This chapter explores trade policy—the laws and strategies a country uses to regulate international trade. This topic is not without controversy. Some politicians worry that their country may become overly dependent on key imported products, like oil, which in a time of war could threaten national security. All of these fears influence governments to reach the same basic policy conclusion: to protect national interests, whether businesses, jobs, or security, imports of foreign products should be restricted. This chapter analyzes such arguments as well as understanding how the demand and supply model applies to international trade.
Upon completion of this module, you will be able to:
- Explain protectionism and its three main forms
- Analyze protectionism through concepts of demand and supply, noting its effects on equilibrium
- Calculate the effects of trade barriers
- Discuss how international trade influences the job market
- Analyze the opportunity cost of protectionism
- Explain how international trade impacts wages, labor standards, and working conditions
- Explain and analyze various arguments that are in support of restricting imports, including the infant industry argument, the anti-dumping argument, the environmental protection argument, the unsafe consumer products argument, and the national interest argument
- Explain dumping and race to the bottom
- Evaluate the significance of countries’ perceptions on the benefits of growing trade
- Explain the origin and role of the World Trade Organization (WTO) and General Agreement on Tariffs and Trade (GATT)
- Discuss the significance and provide examples of regional trading agreements
- Analyze trade policy at the national level
- Evaluate long-term trends in barriers to trade
- Asses the complexity of international trade
- Discuss why a market-oriented economy is so affected by international trade
- Explain disruptive market change
To achieve these objectives: [Edit these items to match your resources and activities.]
- Read the Module 19 Introduction
- Read Chapter 19 in the course textbook, Microeconomics.
- Complete Module 19 Discussion Forum.
- Complete Module 19 Quiz.
- For course instructors, list any other reading assignments here.
[Include all reading assignments here that are outside of Moodle. Be as
concise as possible. More information can be included in the
third-party section below, if necessary.]
- Complete the [specific activities in the module. Include all in the order you want them completed.]
Module Pressbooks Resources and Activities
You will find the following resources and activities in this module at the Pressbooks website. Click on the links below to access or complete each item.
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Students mustMark as done
Chapter 19 of Introduction to Microeconomics -
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Students mustMark as done
Module 19 In Group Class Activity (hide from students)
Course SLO 1: Identify the basic economic principles that serve as the foundation of economic analysis
Course SLO 3: Analyze the economic impact of government regulation, price setting, and taxes on consumers and producers
Course SLO 5: Understand how international trade can improve the well-being of the society
Course SLO 6: Discuss the basic theories behind consumer and producer behavior
Module SLO: 19.5.1 – Assess the complexity of international trade;
Module SLO: 19.5.3 – Explain disruptive market change
As with any type of policy, Section 5 of the textbook explains the tradeoffs that we may experience with a free trade policy. Through this, we see that the economy behaves like a web with many interactions and relationships. For this discussion, your task is to:
- Describe a scenario where a market moves towards free trade. Which groups benefit, and how do they benefit?
- Explain how some people may be harmed from this market moving towards free trade; does this harm justify enacting protectionist policies? What can we do to mitigate that harm?
Instructor Notes:
When we consider a web, students should construct a small network to show how different industries or individuals in an economy are related, even if they are not evident at the surface level. When we see a change in the market, as in moving towards free trade, we may see that some people may initially be harmed, but others are benefited, which may then turn around and provide opportunity for the individual that was harmed initially. This prompt will help students see the economy as a whole and help them see the interactions that are not initially evident.
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