Essay/Term paper: International economic policy: book review

Essay, term paper, research paper:  Economics

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.