The Global Financial Crisis and Protectionism

 
Read the Closing Case: The Global Financial Crisis and Protectionism on page 245. Then, answer the following questions:

1.Why do you think calls for protectionism are greater during sharp economic contractions than during boom periods?
2.Despite the sharp economic contraction during 2008-2009, the increase in protectionist measures was fairly modest. Why do you think this was the case?
3.During 2008-2009 many developed nations gave subsidies to their automobile producers. How might this have distorted international trade? Was this a reasonable thing to do given the circumstances?
4.What might occur if a renewed economic slowdown triggered a wave of protectionist measures around the world? Would protectionism actually protect jobs, or would it make things worse?
5.The volume of world trade rebounded sharply in 2010 on the back of a fairly modest growth rate in the world economy.

What does this tell you about the nature of international production in today’s global economy? What does this tell you about the vulnerability of the world economy to any future trade wars?

 

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