Face-to-face , second term, 30 hours of theory.

Second term
Thursday from 08:30 to 10:30 at 109 Marais 100

This course will be taught in English. Reading material will also be in English.

The aim of the course is to provide an intuitive and formal understanding of the basic principles of international trade.
The underlying focus of this course is to become familiar with the most influential trade theories and then relate these theories to current world issues and events.

Learning Outcomes

Upon successful completion of the course, it is expected that the student will:

• understand, at the level of formal analysis, the major models of international trade, both traditional and modern, and be able to distinguish between them in terms of their assumptions and economic implications.
• understand the principle of comparative advantage and its formal expression and interpretation within different theoretical models.
• be able to analyse the linkages between trade and growth and between trade and income distribution and to identify and critically examine policy implications of these linkages.
• be able to apply partial equilibrium and (where required) general equilibrium models in analysing the economic effects of (a) trade policy instruments such as tariffs, quotas, export taxes, export subsidies, tariff rate quotas etc., (b) retaliatory measures such as anti-dumping duties and countervailing duties and (c) the creation of regional trading arrangements such as free trade areas, customs unions and common markets.
• be familiar with, and be able to critically analyse the main arguments for protection and conversely be able to critically evaluate the relevance and realism of arguments for free trade, taking into account the costs and benefits of trade policy measures on different sections of the community and the implications for the formulation of trade policy.
• be familiar with the major recent developments in the world trading system, and be able to critically analyse key issues raised both by the current round of WTO negotiations and by the spread of regional trading arrangements.

For the Bachelor in Business Engineering :

For the Bachelor in Economics and Management :

None

This course will provide:

1) An analysis of the main theories of international trade in goods and services, and of international movements of capital and labor.
Krugman/Obstfelt:

Ch 2. World Trade: An Overview.
Ch 3. Labor Productivity and Comparative Advantage: The Ricardian Model.
Ch 4. Resources, Comparative Advantage, and Income Distribution.
Ch 5. The Standard Trade Model.
Ch 6. Economies of Scale, Imperfect Competition, and International Trade.
Ch 7. International Factor Movements.

2) A Partial equilibrium analysis of the major instruments of trade policy (tariffs, subsidies, voluntary export restraints, …), their economic effects, and the issues created by their use in practice.
Krugman/Obstfelt:

Ch 8. The Instruments of Trade Policy.
Ch10. Trade Policy in Developing Countries.
Ch 11. Controversies in Trade Policy.

3) An introduction to the economics of regional trading arrangements, such as free trade areas, customs unions and common markets.
Krugman/Obstfelt:

Ch 9. The Political Economy of Trade Policy.

After an introduction to the international trade arena, the following topics will be discussed: comparative advantage, the Ricardian model of trade, the Hecksher-Ohlin model of trade, imperfect competition and trade, tariffs and non-tariff barriers,
international and regional trade agreements (WTO, EU, NAFTA, ...),
strategic trade policy and the political economy of trade policy.

An written exam during the examination session.

International Economics, 9th Edition (2011), By Paul R. Krugman, Maurice Obstfeld, Marc Melitz

Will be available at university reprography service.

Some further reading
• Journal of Economic Perspectives
• Journal of International Trade and Development
• The World Economy
• The Economist

Some Useful Websites
• WTO, http://www.wto.org
• UNCTAD, http://www.unctad.org
• OECD, http://www.oecd.org
• International Center for Trade and Sustainable Development, http://www.ictsd.org
• The World Bank, http://www.worldbank.org
• Paul Krugman's (Princeton University) website, http://www.wws.princeton.edu/~pkrugman/
• Alan Deardorff's Glossary of International Economics Terms, http://www-personal.umich.edu/~alandear/glossary