International Trade

2020/2021

Учебный год

ENG

Обучение ведется на английском языке

4

Кредиты

Кто читает:

Факультет мировой экономики и мировой политики

Статус:

Курс обязательный

Когда читается:

3-й курс, 1, 2 модуль

Преподаватель

Черников Сергей Юрьевич

Course Syllabus

Abstract

Introduction to Economics 1 and Macroeconomics are required and also familiarity with World economy and basic management subjects is welcome. Students who successfully complete this course will have their own logic and way of thinking to come to a conclusion on some issues in International Trade. To achieve these goals, this course provides basic concepts and principles of the world trade, specifically concerning the theory and policy. The first half of the course covers trade theories-Ricardian model, Heckscher Ohlin model, Economies of scale, Trade within imperfect competition, TNCs and Foreign Direct Investment. The second half of the course will cover the effects of trade policy, trading channels and entry patterns, world trading system including WTO and Integrations, International trade environments and finally Trade policy in developing countries.

Learning Objectives

• This course aims to explore the important concepts and issues in International trade. The study of international trade involves economy- wide issues such as conventional comparative advantage, Increasing returns to scale, trade between firms and trade policies.

Expected Learning Outcomes

• Understand basic instruments of studying economics such as understanding graphs, basic mathematic tools, and statistics.
• Students can understand conventional trade theory, new trade theory and the role of firms in the global economy.
• Students can apply the basic theories to understanding the current issues on trade policy, international institutions such as WTO and RTA, and to discuss various issues on international trade.

Course Contents

• Introduction: Stylized Facts about Trade
  The first lecture highlights and briefly discusses important themes which arise throughout the course. These themes are (1) the gains from trade; (2) the pattern of trade and (3) protectionism. Topics What Is International Economics about? The Gains from Trade The Pattern of Trade How Much Trade?
• World Trade: an Overview Ricardian Model
  This lecture gives a brief overview of world trade. In particular, it discusses what we know about the quantities and pattern of world trade today. It employs the gravity model as a framework to describe trade. This framework describes trade as a function of the size of the economies and their distance. The gravity model can predict where countries are trading more or less than expected. The lecture of the week also briefly introduces Ricardian model framework. Topics Who Trades with Whom? Size Matters: The Gravity Model Using the Gravity Model: Looking for Anomalies Impediments to Trade: Distance, Barriers, and Borders The Changing Pattern of World Trade Has the World Gotten Smaller? What Do We Trade? Service Offshoring Do Old Rules Still Apply? The Concept of Comparative Advantage
• Ricardian Model
  The Ricardian model provides an introduction to international trade theory. This conventional model of trade involves two countries, two goods, and one factor of production, labor. Differences in relative labor productivity across countries give rise to international trade generating important insights concerning comparative advantage and the gains from trade. The lecture deals with the examination of the production possibility frontier, opportunity cost and the relative prices of goods for one country. General equilibrium analysis on relative supply and demand curves will demonstrate that at least one country will specialize in production. It is pointed out that one can apply the Ricardian theory of comparative advantage to analyze three misconceptions about the advantages of free trade. Topics A One-Factor Economy Production Possibilities Relative Prices and Supply Trade in a One-Factor World Determining the Relative Price After Trade The Gains from Trade Misconceptions about Comparative Advantage Productivity and Competitiveness The Pauper Labor Argument Exploitation Comparative Advantage with Many Goods Adding Transport Costs and Nontraded Goods
• Heckscher-Ohlin Model Specific Factors Model
  Unlike the Ricardian model, the Heckscher-Ohlin theory considers the pattern of production and trade which will arise when countries have different endowments of such factors of production as labor, capital, and land; where these factors are mobile between sectors in the long run. The empirical tests of the Heckscher-Ohlin model will be examined with a case study looking at income inequality in the United States. Also the Specific Factors model is presented to gain a better understanding of the distributional effects of trade. While the losers from trade are often able to successfully lobby for protectionism, the lecture highlights three reasons why this is an inefficient method of limiting the losses from trade. Topic Model of a Two-Factor Economy Prices and Production Choosing the Mix of Inputs Empirical Evidence on the Heckscher-Ohlin Model Trade in Goods as a Substitute for Trade in Factors Patterns of Exports Between Developed and Developing Countries The Specific Factors Model Assumptions of the Model Production Possibilities International Trade in the Specific Factors Model Income Distribution and the Gains from Trade The Political Economy of Trade: A Preliminary View
• Economies of scale in International Trade
  This part introduces trade based on economies of scale in production which is called intraindustry trade, and describes, for example, the trading of one type of manufactured good for another type of manufactured good. It is shown that trade can occur when there are no technological or endowment differences, but when there are economies of scale or increasing returns in production, as opposed to the constant returns to scale assumed in previous chapters. The lecture will deal with external economies, and some non-economic reasons for economic geography. Topic Economies of Scale and International Trade: An Overview Economies of Scale and Market Structure The Theory of External Economies Specialized Suppliers Labor Market Pooling Knowledge Spillovers External Economies and Market Equilibrium External Economies and International Trade External Economies, Output, and Prices External Economies and the Pattern of Trade Trade and Welfare with External Economies Interregional Trade and Economic Geography
• International Trade under imperfect Competition
  Description The lecture will focus on internal economies, whereby the production cost per unit of output depends on the size of the individual firm but not necessarily on the size of the industry Internal economies of scale give rise to imperfectly competitive markets, including monopoly and monopolistic competition. Topic The Theory of Imperfect Competition Monopoly: A Brief Review Monopolistic Competition Monopolistic Competition and Trade The Effects of Increased Market Size The Significance of Intraindustry Trade Firm Responses to Trade: Winners, Losers, and Industry Performance Performance Differences Across Producers The Effects of Increased Market Size Trade Costs and Export Decisions Dumping
• Foreign Direct Investment and Outsourcing
  The lecture discusses the phenomenon of TNCs with connection to foreign direct investment (FDI). The decision by a multinational to engage in FDI is driven by a proximity-concentration trade-off. Also, multinational must decide whether to engage in direct foreign production through a foreign affiliate or to engage in outsourcing. Finally, the outcome of FDI and outsourcing will be discussed. Topic Multinationals and Outsourcing Source of TNC power The Firm’s Decision Regarding Foreign Direct Investment Outsourcing Consequences of Multinationals and Foreign Outsourcing
• Midterm Exam
• Entry strategies in International trade
  This lecture is covering various entry strategies applied in trading to foreign markets. Indirect and direct forms will be discussed with regard to the FDI take-aways from the previous topic. Also, as these strategies are not exclusive, we will discuss their appropriateness for different trade situations and risk accepted. We will look at advantages and disadvantages associated with each method. Topic Strategic alliances Analysis of entry strategies Assembly operations Turnkey operations Acquisition Exporting Licensing Management contract Joint venture Manufacturing
• Trade Policy: Tariff
  This chapter and the next three focus on international trade policy. This chapter provides a framework for analyzing the economic effects of trade policies by describing the tools of trade policy and analyzing their effects on consumers and producers in domestic and foreign countries. Topic Basic Tariff Analysis Supply, Demand, and Trade in a Single Industry Effects of a Tariff Measuring the Amount of Protection Costs and Benefits of a Tariff Consumer and Producer Surplus Measuring the Costs and Benefits
• Trade Policy: Nontariff Barriers
  Other types of trade policy can be analyzed with the method used in the analysis on tariff. An export subsidy operates in exactly the reverse fashion of an import tariff. An import quota has similar effects as an import tariff upon prices and quantities, but revenues, in the form of quota rents, accrue to the quota license holders. Other types of trade policy tools will be discussed - non-tariff barriers such as Antidumping measures, Safeguard measures, Countervailing measures, Technical barriers to trade, and Sanitary measures. Topic Export Subsidies: Theory Import Quotas: Theory Voluntary Export Restraints Local Content Requirements Antidumping Safeguards Countervailing measures Technical barriers to trade Sanitary measures
• Distribution channels in international trade
  Any trading company is required to make several channel organization decisions that will affect its trading patterns, including their length, width, and number. This lecture examines the contents and various factors that influence these decisions. Topic Direct and indirect selling channels Types of intermediaries: direct channel Types of intermediaries: indirect channel Channel development Channel adaptation Channel decisions
• WTO and Integrations impact
  The part deals with a the mechanism and brief history of international trade agreements within both Integrations and International Organizations. The main issues that govern trade within Integrations and the WTO operations will be discussed, as well as their possible future transformations. Topic Integrations and International organizations Integration evolution Trade creation and diversion GATT and WTO operations The Case for Free Trade Future of WTO
• Political and legal environments of international trade
  This part examines the interrelationships among different type of political and legal environments and trade decisions. The discussion will focus on how the political climate, such as forms of government, indicators of political instability, and political risks affects the trade and investment climate. Also the lecture will look at how countries’ varying laws and interpretations affect imports and exports.
• Trade and Development
  This lecture will discuss trade policy considerations in the context of specific issues. It focuses on the use of trade policy in developing countries and controversies in trade policy. This chapter discusses both the successful and unsuccessful trade policy strategies which have been applied by developing countries in attempts to address these concerns. We will discuss infant industry argument, import-substituting industrialization in 1950s and trade liberalization after 1980s. Topic Import-Substituting Industrialization The Infant Industry Argument Promoting Manufacturing through Protectionism Results of Favoring Manufacturing: Problems of Import-Substituting Industrialization Trade Liberalization Trade and Growth: Takeoff in Asia Pandemic aftermath
• Final exam

Assessment Elements

• Midterm
• Final
• Homework
• In-class work
• Attendance

Interim Assessment

• Interim assessment (2 module)
  0.1 * Attendance + 0.3 * Final + 0.2 * Homework + 0.2 * In-class work + 0.2 * Midterm

Bibliography

Recommended Core Bibliography

• Krugman, P. R., Obstfeld, M., & Melitz, M. J. (2015). International Economics: Theory and Policy, Global Edition (Vol. Tenth edition, global edition). Boston: Pearson. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=nlebk&AN=1419045
• Onkvisit, S., & Shaw, J. J. (2009). International Marketing : Strategy and Theory (Vol. 5th ed). London: Routledge. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=275440

Recommended Additional Bibliography

• Carbaugh, R. J. (2012). International economics. South-Western.