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Provision for Adversity

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  • Martin C. McGuire

    (Department of Economics, University of California-Irvine)

Abstract

As contemporary globalization of the world economy continues, each nation enjoys the benefits of greater exploitation of scale economies and of specialization and exchange. But equally true, globalization causes greater dependence among regions, nations, and localities, and this necessarily implies greater vulnerability to disruption of supply to and from each other. Alternative actions that countries might take or actually have taken to manage this vulnerability include (1) stockpiling of goods that might be lost due to political, economic, or natural causes; (2) protection of domestic industries that otherwise could not compete in world markets (the classical “national security†argument for protectionism); (3) maintenance of standby production capabilities, itself closely related to stockpiling; and (4) formation of special economic unions or contingency agreements to guarantee stable supply and exchange. This article develops a unified analysis of the first two of these alternative policies. The analysis examines and summarizes how all these factors combine to determine the optimal level and mix of policies.

Suggested Citation

  • Martin C. McGuire, 2000. "Provision for Adversity," Journal of Conflict Resolution, Peace Science Society (International), vol. 44(6), pages 730-752, December.
    • Handle: RePEc:sae:jocore:v:44:y:2000:i:6:p:730-752
    DOI: 10.1177/0022002700044006002
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Martin McGuire, 2006. "Uncertainty, Risk Aversion, And Optimal Defense Against Interruptions In Supply," Defence and Peace Economics, Taylor & Francis Journals, vol. 17(4), pages 287-309.
    2. Todd Sandler, 2000. "Economic Analysis of Conflict," Journal of Conflict Resolution, Peace Science Society (International), vol. 44(6), pages 723-729, December.
    3. Toshihiro Ihori & Martin McGuireb, 2008. "National Adversity: Managing Insurance and Protection," CIRJE F-Series CIRJE-F-554, CIRJE, Faculty of Economics, University of Tokyo.
    4. Toshihiro Ihori & Martin McGuire, 2006. "Group Provision Against Adversity: Security By Insurance vs. Protection," CARF F-Series CARF-F-086, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    5. Stergios Skaperdas & Constantinos Syropoulos, 2001. "Guns, Butter, and Openness: On the Relationship between Security and Trade," American Economic Review, American Economic Association, vol. 91(2), pages 353-357, May.
    6. Toshihiro Ihori & Martin McGuire, 2006. "Patterns of Non-exponential Growth of Macroeconomic Models: Two-parameter Poisson-Dirichlet Models," CIRJE F-Series CIRJE-F-450, CIRJE, Faculty of Economics, University of Tokyo.
    7. Huntington, Hillard G., 2003. "Energy disruptions, interfirm price effects and the aggregate economy," Energy Economics, Elsevier, vol. 25(2), pages 119-136, March.
    8. Martin C. McGuire, 2010. "Economic Analysis and International Security," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 6(2), pages 313-346, March.

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