Deck 5: A State-Centered Approach to Trade Politics

Question 1

In cases of infant industries,even with domestic economies of scale,

A) a new firm will be able to effectively compete once it begins to export.
B) a new firm will find it easier to compete with tariffs to protect it from more efficient foreign competitors.
C) a new firm will find it harder to compete with tariffs to protect it from less efficient foreign competitors.
D) government procurement may be the only way to make them internationally competitive.
E) export subsidies may be necessary to achieve economies of experience

Answer 1

B

Question 2

The infant industry case for protection argues that

A) long term gains will be greater than short term losses.
B) short term losses will be greater than long term gains.
C) long term losses will be greater than short term losses.
D) short term losses will be greater than long term losses.
E) long term gains will be greater than short term gains.

Answer 2

A

Question 3

In the context of industrial policies,strong states are characterized by a

A) high degree of de-centralization of authority.
B) low degree of coordination among state agencies.
C) large number of channels through which societal actors can attempt to influence policy.
D) small number of channels through which societal actors can attempt to influence policy.
E) powerful business and labor interest groups.

Answer 3

D

Question 4

Which of the following reasons is NOT one of the ones used to justify subsidies to high technology industries in advanced industrialized countries?

A) They earn a higher than normal return on investment.
B) They pay higher wages to workers than standard manufacturing industries.
C) They boost the international competitiveness of such industries.
D) The welfare gains generated by this industry are substantially larger than the welfare losses incurred during the period of subsidy.
E) Choosing these economic winners leads to less corruption.

Question 5

Countries losing high technology industries as a consequence of industrial policies pursued by other countries

A) has not been much of a source of conflict in the international trade system.
B) usually don't respond by supporting their own firms to offset the advantages enjoyed by foreign firms.
C) rarely attempt to prevent foreign governments from using industrial policy subsidies.
D) has been a source of much conflict in the international trade system.
E) is almost entirely the result of different factor advantages as predicted by standard trade theory.

Question 6

Economies of scale arise when the average cost of production falls

A) as the number of units falls.
B) as the number of units rises.
C) as specific experience skills decline.
D) as specific experience skills increase.
E) as profits increase.

Question 7

The logic of infant industry protection was first developed to

A) improve the growth of German industries in competition with American ones.
B) improve the growth of American industries in competition with British ones.
C) improve the growth of Japanese industries in competition with American ones.
D) improve the growth of American industries in competition with Japanese ones.
E) improve the growth of American industries in competition with German ones.

Question 8

Strategic trade theory

A) provides unambiguous support for the claim that government intervention in high-technology industries can raise national income.
B) suggests it is easier for governments to identify which high-technology industries can raise national income because of national security interests.
C) does not provides unambiguous support for the claim that government intervention in high-technology industries can raise national income.
D) is strong because it makes it easier to translate the theory's simpler conclusions into effective policies.
E) is more of an explanatory theory than a prescriptive theory.

Question 9

Strategic trade theory assumes that

A) defense-related procurement practices are designed to meet national security objectives.
B) in the absence of intervention by any government, high tech industries offer a first-mover advantage.
C) In the absence of intervention by any government, high tech industries offer a last-mover advantage.
D) societies will be especially interested in oligopolistic high tech industries because of zero-sum excess returns.
E) the combination of economies of scale and experience create higher wages.

Question 10

Industrial policies that encourage the development of green technology

A) attempt to orient US trade around more environmentally friendly manufacturing and infrastructure.
B) have not generated much debate over the government's role in shaping the national economy.
C) have been promoted by free trade advocates to give American industries an unfair advantage over their foreign competitors.
D) are examples of government successes in picking winners that improve the general global welfare.
E) are generally beneficial in boosting productivity in other high technology sectors.

Question 11

The semiconductor industry prospered in the United States until the early 1980s because

A) of earlier government support of funding for research & development (R&D) and defense related purchases.
B) tariffs and quotas kept Japanese chips out of the American market.
C) the US government restricted the ability of Japanese semiconductor firms to purchase existing American firms.
D) tariffs and quotas kept European chips out of the American market.
E) of different factor advantages as predicted by standard trade theory.

Question 12

An infant industry firm may be reluctant to borrow from private markets instead of relying on a public subsidy when they fear that

A) experienced workers will go to work for other firms.
B) private capital markets are too efficient.
C) private capital markets are too week.
D) they will not achieve sufficient economies of scale.
E) governments will not extend them loans.

Question 13

___________ is often depicted as an example of a weak state that has been unable and unsuccessful in using industrial policy to promote economic development.

A) Great Britain
B) France
C) United States
D) Japan
E) China

Question 14

Oligopolistic global markets are characterized by

A) profits greater than earned in equally risky investments.
B) higher incomes for workers.
C) lower costs than those incurred in equally risky investments.
D) a smaller number of competing firms.
E) a larger number of competing firms.

Question 15

In order to claim that a tariff and other forms of government intervention raise social welfare one must be able to demonstrate that

A) something prevents factors from shifting into industries that yield lower costs than are available in other sectors in the economy.
B) something prevents factors from shifting into industries that yield higher costs than are available in other sectors in the economy.
C) something prevents factors from shifting into industries that yield lower returns than are available in other sectors in the economy.
D) something prevents factors from shifting into industries that yield higher returns than are available in other sectors in the economy.
E) short term losses will be greater than long term gains.

Question 16

In the context of industrial policies,weak states are characterized by

A) high degree of centralization of authority.
B) high degree of coordination among state agencies.
C) large number of channels through which societal actors can attempt to influence policy.
D) small number of channels through which societal actors can attempt to influence policy.
E) weak business and labor interest groups.

Question 17

Subsidies are more efficient than tariffs because they better

A) target tariff barriers by foreign producers.
B) target higher long term foreign producers' costs.
C) lower higher short term domestic producers' costs.
D) raise higher short term domestic producers' costs.
E) lower consumer welfare benefits.

Question 18

___________ is often depicted as the preeminent example of a strong state that has been able and willing to use industrial policy to promote economic development.

A) Great Britain
B) Germany
C) United States
D) Japan
E) Post-Soviet Russia

Question 19

Economies of experience arise when the cost of production falls

A) as the number of units falls.
B) as the number of units rises.
C) as specific experience skills decline.
D) as specific experience skills increase.
E) as profits increase.

Question 20

The state-centered approach to trade politics argues that national policymakers intervene in the economy in pursuit of

A) national objectives that are dependent on domestic groups' self-interested concerns.
B) national objectives that are independent of domestic groups' self-interested concerns.
C) international objectives that are dependent on foreign groups' self-interested concerns.
D) international objectives that are independent of foreign groups' self-interested concerns.
E) national objectives that are dependent on foreign groups' self-interested concerns.

Question 21

The global commercial aircraft industry was dominated by two American firms until the early 1990s because

A) tariffs and quotas kept European firms out of the American market.
B) of different sector advantages influenced by domestic interest groups.
C) of earlier government support of funding for research & development (R&D) and defense related purchases.
D) of late-mover advantages to utilize the most recent technological innovations.
E) failure of Japanese government to successfully utilize industrial policy in this sector unlike their success in the semi-conductor sector.

Question 22

A late-industrializing country is one that is trying to develop manufacturing industries in competition with established manufacturing industries in other countries.

Question 23

The infant industry case for protection argues that there are cases in which newly created firms will not be efficient initially but could be efficient in the long run if they are given time to mature.

Question 24

The state-centered approach to trade politics argues that national policymakers intervene in the economy in pursuit of national objectives that are dependent on domestic groups' self-interested concerns.

Question 25

State strength is the degree to which national policymakers are insulated from domestic interest group pressures.

Question 26

European global commercial aircraft firms were able to catch up to American firms by the late 1990s because

A) they used similar industrial policy tactics used by American governments in a previous era.
B) of different sector advantages obtained by European domestic interest groups.
C) tariffs and quotas kept American firms out of the European market.
D) of late-mover advantages to utilize the most recent technological innovations.
E) the US was unsuccessful in of obtaining WTO sanctions against their illegal actions.

Question 27

Economies of experience arise when efficient production requires specific skills that can only be acquired through extensive research and development in the industry.

Question 28

Countries losing high-technology industries as a consequence of the industrial policies pursued by other countries often respond by supporting their own firms in a similar way.

Question 29

Explain the differences and similarities between society-centered and state-centered approaches to trade politics.

Question 30

Weak states may be less able to implement industrial policies that redistribute societal resources because policymakers need worry less that such policies will have a negative impact on their position of power.

Question 31

Efficiency gains realized as a result of greater experience dynamics are often called

A) "moving up the learning curve".
B) "moving down the learning curve".
C) "moving up the indifference curve".
D) "moving down the indifference curve".
E) "moving up the profitability curve".

Question 32

Microfoundations are explanations that set out the incentive structure that

A) encourages state officials to adopt policies that promote global welfare.
B) encourages state officials to adopt policies that promote their re-election.
C) encourages state officials to adopt policies that promote national welfare.
D) encourages state officials to adopt policies that promote micro-businesses.
E) encourages state officials to adopt policies that compensate for factor immobility.

Question 33

Economies of scale arise when the unit cost of producing falls as the number of units produced rises.

Question 34

In general,state-centered approaches are useful because they

A) better explain national security microfoundational reward incentives.
B) better establish the parameters in which policy must be made.
C) better explain how government intervention can improve national welfare.
D) better explain state autonomy in democratic political systems.
E) better provide a useful check on the tendency to focus exclusively on the interests of interest groups.

Question 35

Explain the costs and benefits of state-centered rationale for government intervention compared to standard trade theory.

Question 36

Explain the rationale for infant industry protectionism first proposed by Alexander Hamilton in the 1790s and Fredrick List in the mid-nineteenth century.

Question 37

Strategic trade theory asserts that many high-tech industries are characterized by oligopolistic competition that often has a first-mover advantage.

Question 38

Explain the differences between economies of scale and economies of experience using the example of commercial aircraft.

Question 39

Efficiency gains realized as a result of greater skill in production are often called "moving up the learning curve".

Question 40

Explain how society-centered approaches differ from state-centered approaches with regard to state autonomy.

Question 41

How does strategic trade theory provide the justification for industrial policy in high technology industries?

Question 42

Explain why and how industrial policies in high-technology industries have created so much conflict in international trade.

Question 43

Explain how government R&D subsidies and procurement policies affected strategic trade rivalries in the semiconductor and commercial aircraft industries between the US,Japan & the EU in the past thirty years.

Question 44

Compare and contrast the relative costs and benefits of tariffs versus subsidies and/or public loans in infant industry protectionism.

Question 45

Explain how state strength determines the political foundation of industrial policies by comparing Japan,France and the United States after WWII.