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Course Objectives:
The course deals with economic relations in a global economy characterized by
increasing interdependence of nations. Students through the foundations of neoclassic
and contemporary economic theories will learn about absolute and comparative
advantage of nations in international trade. The course also introduces new theories of
international trade that have relevance in the current global economic situation. Students
through various graphs will be able to see the impacts of trade barriers and protectionist
government policies on the economic welfare of nations. Furthermore, students in this
course will learn the challenges of globalization such as environmental questions, the
exploitation of children by multinational firms, the unfair terms of trade and the clash
between multinational firms and developing countries on employment, transfer pricing
and investment policies. In addition, students through group research and case reports
will present their findings to the class.
Text book:
Recommended readings:
Yergin, D. and Stanislaw, J., Commanding Heights: The Battle for the World Economy,
PBS Series, 2002
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Course Outline
Ch 3 International equilibrium
2
• Does Factory Endowment theory explain trade patterns well?
• Should the terms of trade be monitored globally so that poor nations
can’t always be disadvantageous? Carbaugh, p 73)
3
June 30 Midterm chapters 1-5
• Explain how bonded warehouse and foreign trade zone, are instrumental in
postponing import duties and promote international trade. Who benefits out of
such trade practice? Explain.
• Explain how the tariff welfare affects small nations. Use the model on page
129, Carbaugh to explain.
• Who pays for import restrictions? What are the arguments used by some to
justify import restrictions.
• Distinguish between consumer surplus and producer surplus. Explain how
each of them relates to the economic welfare of a country.
Source: chapter 5 Carbaugh
• Explain how the Japanese voluntary auto export restraint policy helped the
automakers in the U.S.
• Explain how import quota affects the welfare of a country (redistribution
effect, protective effect, consumption effect and revenue effect). Use the
example provided on page 157, Carbaugh, 2004
• Explain how tariff and quota restrictions affect the welfare of a nation
4
• Is regional grouping of countries such that of EU, NAFTA
helpful for the global economy? Source, chapter 9, Carbaugh 9,
2004
• What kinds of conflict do exist between multinational firms and
host nations? (Hint: transfer pricing, balance of payment, tax,
national sovereignty)
• Explain how migration of labor from Mexico to the United States
can be perceived as wage equalizing factor. What barriers do you
see that hamper such a process from happening soon? (chapter 10,
2004)
• What are the challenges of the enlargement of EU? E.g. the
accession of new members, mostly Central and East European
countries?
5
industry. Do you think the US aviation industry will better off for having lost this
contents? (Refer to p. 320, Carbaugh, 2004 for detailed information).
Project report (20 %) You can earn maximum of 15 % from your paper and project
presentation and 5 % from your group peer evaluation).
Each student will be given a grade based on his/her level of participation within a group
and individual effort. The student’s participation quality will be judged both by the
outcome of the group written paper (7-8) page typed double space with full bibliography)
and by his/her individual contribution to the group paper report. Even though, the whole
class is expected to read the case/s of the day and actively participate in discussion, the
assigned group should play an active role in leading and initiation discussion. There will
be peer evaluation within a group. As the end of the class, the group written report and
the peer evaluation reports will be collected by the instructor. Peer evaluation is based on
individual’s a) intellectual contribution, b) full participation c) creative and original ideas
d) resourcefulness.
Grading System:
Class participation: class participation is highly encouraged in both lecture time and case
presentation. The instructor will take attendance from time to time. Those who attend
classes and who actively participate during discussion sessions will be securing
themselves few points that can be critical in the case of borderline situation.
Policy on cheating:
Students are expected to be above reproach in all scholastic activities. Students who engage in
scholastic dishonesty are subject to disciplinary penalties, including the possibility of failure in
the course. "Scholastic dishonesty includes but is not limited to cheating, plagiarism, collusion,
and the submission for credit of any work or materials that are attributable in whole or in part to
another person, taking an examination for another person, any act designed to give unfair
advantage to a student or the attempt to commit such acts." (Regent's rules and regulations).