Paragraph Completion- Trade Policy

You are here: Home  Paragraph Completion  Trade Policy

Paragraph Completion - Trade Policy

In strictly economic terms, the political character of a nation's trading partners should not matter. However, in a world of strategic competition, international commerce can be, and usually is, an instrument of policy, and its use in that context should not be denied simply because it breaches the sacred principle of free trade.

  1. This is the Rodrik trilemma: it is not possible to have the nation-state, democracy, and globalization at the same time.
  2. As Friedrich List, the nineteenth-century pioneer of economic nationalism, pointed out, free trade assumes a peaceful world.
  3. That is why, all over the world, nations have been revolting against globalization in the name of democracy.
  4. As limiting free trade inevitably leads to trade wars, it is not possible to achieve legitimate protectionist aims without disrupting the world economic system.

    • Correct Answer
      Choice B

    Detailed Solution

    The main idea of the given paragraph is that in a world of strategic competition, the context–the political character of a nation's trading partner–matters. Because this is so, international commerce is usually a matter of policy, even if its use in this manner is a breach of the principle of free trade.

    Of the given options, option B completes the given paragraph best. The paragraph stresses the importance of political context in international commerce. Option B carries forward the idea in the penultimate line: free trade assumes a peaceful world.

    Option A, which talks of the 'Rodrik trilemma', of the nation state, democracy and globalization, discusses many new ideas. The paragraph does not explain any trilemma. So, option A is not a good option to complete the paragraph.

    Option C is ruled out for the same reason as A. The paragraph given does not talk of globalization or democracy.

    Option D is a good contender to B, as it touches upon the ideas mentioned in the paragraph: limiting free trade and disruption of the world economic system. But while the paragraph is about how political context influences trade policy, option D is about nations achieving "legitimate protectionist aims". Option D is about a related, but slightly tangential idea. Between options B and D, B is better.

    Correct Answer: Choice (B)

    Our Online Course, Now on Google Playstore!

    2IIM's App

    Fully Functional Course on Mobile

    All features of the online course, including the classes, discussion board, quizes and more, on a mobile platform.

    Cache Content for Offline Viewing

    Download videos onto your mobile so you can learn on the fly, even when the network gets choppy!

    Get it on Google Play