Impacts- Econ Good- Interdependence

Impacts- Econ Good- Interdependence

Federal Reserve Chairman Ben Bernanke said Monday he is hopeful the economy will gain traction and not fall back into a "double dip" recession. "My best guess is we will have a continued recovery, but it won't feel terrific," Bernanke said. That's because economic growth won't be robust enough to quickly drive down the unemployment rate, now at 9.7%, he said in remarks to the Woodrow Wilson International Center for Scholars, a non-partisan research group. The economy grew at a 3% pace in the first quarter of this year. That's good growth during normal times. But coming out of such a deep recession, the economy must grow much more strongly to make a dent in the jobless rate. Fears have grown that the recovery could be derailed if Europe's debt crisis turns into a broader financial contagion, crimping lending in the United States and around the globe. The situation has spooked investors and sent Wall Street into fits of panic. Bernanke said the Fed is monitoring the European crisis carefully, and he believes European leaders are taking the right steps to deal with the problems. Asked when the Fed will start raising interest rates, Bernanke quipped "in the future." The Fed has pledged to hold rates at record lows to nurture the recovery. A growing number of economists now believe the Fed won't start to boost rates until next year given the European crisis and high unemployment. Bernanke didn't offer new clues about when the Fed would reverse course and start to tighten credit. However, he did say the Fed won't be able to wait until the jobs market is fully healed before it pushed rates up. Observing the economy, Bernanke said the news so far is "pretty good." Both consumers and companies are spending sufficiently to keep the recovery moving forward. The private sector, he said, is "picking up the baton" as government stimulus, which mainly powered the recovery in its earliest stage, starts to fade. On relations between the United States and China, Bernanke said there is a real desire between the two superpowers to work together to ease trade and economic tensions. Both countries sort of understand there is a "co-dependency relationship," Bernanke said. The United States snaps up Chinese goods and the Chinese is a major buyer of the U.S. government's debt.

Impacts- Econ Good- Interdependence

Economic growth spurs international cooperation which, through free trade- causes peace
O-Reilly 9 (Pierce, prof of poli-sci @ Columbia U, apr 29-9, Columbia.edu , http://www.columbia.edu/cu/polisci/pdf-files/miniapsa_oreilly.pdf ) ET

Now, wars are costly; in addition to the costs of military build-up and waging a war, natural and other

productive resources are often destroyed during war- fighting. Consider, for example, the Soviet Union's

scorched-earth policy during 1941-42, or the budget deficits incurred by the United States during the recent

war in Iraq. Reputational losses and international approbation must also be considered; consider the repu-tational dificulties encountered by Britain and France during their abortive attempt to seize the Suez canal in 1956. Given these deadweight losses, we are at pains to explain why countries face such strong incentives to go to war for resources. I argue that economic heterogeneity can be important part of an explanation of this. Economic asymmetries are instances where countries of similar gross output might be possessed of very resource endowments; Germany may have coal, France iron, or Japan may have high-skilled labour and capi- tal while China may have low-skilled labour and land. This should result in increased incentives for countries to wage wars in instances where their would-be opponent has a relatively large amount of a resource they lack. Trade, however, can allow natural resources to be shared between countries on an international market. Often, countries will prefer to buy resources their economy needs from another country rather than take them by force. Thus free trade can be a key mechanism in reducing the incentives for countries to go to war. Where trade is feasible (where tarrifs and shipping costs are low enough, and where economic resources are tradable) it can be cheaper to buy goods than to appropriate them by force. I will show that the gains to peace from trade are largest when war is most likely, and that the gains to peace are directly proportional to the `gains from trade', familiar from trade models.
Growth good- spurs international dependence that provides security- Kissinger and Cold war conclude
Franks 80 (Edward, assistant director @ Rand, RAND,Aug 80, http://www.rand.org/pubs/notes/2009/N1568.pdf ) ET

Events of the late 1960s and early 1970s resulted in significant changes in the international system. According to numerous policy-makers, these changes were at least in part due to increased economic interdependence. As a result, there ensued a proliferation of strategies linking the international economic and political arenas. Such linkage strategies were a prevalent feature of diplomacy during the Nixon/ Ford administration, especially with regard to the concept of détente. Kissinger envisioned that the interrelationship of issues, as expressed in the linkage concept, would develop a network of interests between the United States and the Soviet Union and make both sides conscious of what they would lose by reverting to policies of confrontation and crisis. One important aspect of this linkage phenomenon is the economic component. This is reflected in the widespread belief that economic interdependence brings political and security benefits. Indeed during the cold war, when contact between the United States and the USSR was severely limited, many argued that improved economic relations might mitigate international tensions, as evidenced by several congressional resolutions to that effect. The question, according to Kissinger, was, “ how could trade and economic contact serve the purpose of peace?” Kissinger (1977, p. 158) concluded that: Over time, trade and investment may lesson the autocratic tendencies of the soviet system, invite gradual association of the Soviet economy with the world economy, and foster a degree of interdependency that adds an element of stability to the political equation.

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