World Economy and Introductory International Economics
- learn how to make economic knowledge useful in daily life and form judgements on particular economic issues
- Knowledge of major facts on the spatial distribution of economic activity in the modern world and an understanding of its driving forces
- Ability to use knowledge of economic theory and relevant data in discussions simple issues related to the world economy
- The first and second waves of globalisationThe world around 1815. Spatial distribution of economic activity. Transportation and communications of those times. Business practices in international trade and finance. Take-off of Europe. Technical progress in transportation and communications; railroads, steam ships and telegraph, Suez channel. Transportation costs and international trade. Labour migrations. Development and internationalisation of capital markets. Global economic and financial institutions of XIX and early XX centuries. The world around 1913. Economic consequences of the World War I. The Great Depression and the rise of protectionism. Slow globalisation after the World War II. The Great Recession of 2008 and its consequences for trade and finance.
- Resources and their spatial distributionGlobal population distribution. Population density. Factors influencing population distribution. Population growth over time and space. Overpopulation. Maltusian trap. Renewable and non-renewable resources. Green revolution and other innovations in food production. Demographic transition. Age structure of population. Migration. Natural resources and their diminishing weight in GDP. Limits of growth. Peak-oil hypothesis and its failure. Trends in energy consumption and production. Renewable sources of energy.
- Ricardian theory of tradeComparative advantages. Ricardian theory (2x2 settings). Relative demand and relative supply. Misconceptions about comparative advantages. Comparative advantages with many goods/many countries. Relative wages in the Ricardian economy. Empirical evidence on the Ricardian model.
- MD-XS modelMD-XS model as a form of demand and supply model. Small and large open economies. Modelling tariff on case of small open economy. Welfare effect of tariff. Modelling tariff in case of large open economy. Terms of trade and tariff. Welfare effect of tariff in case of large open economy. Effective rate of protection.
- New economic geography approach to tradeEconomy of scale vs love for variety. Monopolistic competition. Introduction to the Krugman model. Effect of increased market size. Effect of market integration. Intraindustry trade. Grubel-Lloyd index. Exporters’ premia. Introduction to the Melitz model. Gaining, losing and exiting firms in case of international trade opening. Trade costs and decision to export. Selection effect. Evidence on Krugman and Melitz type gains from trade.
- Transportations and communicationTransportation modes. Transportation infrastructure. Transport costs. Transport costs vs border-crossing costs. Communication costs and business practices.
- Foreign direct investmentsMultinational enterprises. Forms of foreign investments: debt vs equity. Foreign direct investments. Greenfield and brownfield FDI. Investments and divestments. Sources and destinations of FDI. Horizontal and vertical FDI. Reasons for FDI. FDI vs outsourcing. Barriers to international trade and investments. Offshoring. Value chains.
- Student presentationsGroup presentations of students’ projects and discussion.
- Interim assessment (3 module)0.2 * Final exam + 0.5 * Interim exam + 0.3 * Participation in class
- Giancarlo Gandolfo. (2014). International Trade Theory and Policy. Springer. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.b.spr.sptbec.978.3.642.37314.5
- Redding, S. J., & Turner, M. A. (2015). Transportation Costs and the Spatial Organization of Economic Activity. Handbook of Regional and Urban Economics, 1339. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.h.eee.regchp.5.1339
- Rogoff, K. S., Helpman, E., & Gopinath, G. (2014). Handbook of International Economics. Oxford, England: North Holland. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=576373
- Rua, G. (2014). Diffusion of Containerization. Finance and Economics Discussion Series. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.p.fip.fedgfe.2014.88