College Policy on Intellectual Integrity
International Trade
Eco344
<<Spring 2009>>
Syllabus
S. Atri
Office Hours:
Mahar 431A
Tuesday: 12:30 - 2:00 PM
Phone: (315) 312-3954
Thursday: 11:30 - 2:00 PM
Other days: By appointment
Email: atri@oswego.edu and by appointment
COURSE DESCRIPTION AND OBJECTIVE
The economies of the world are becoming increasingly interdependent.
The economic benefits of trade among nations have long been recognized
and international trade has been growing since the emergence of nation
states despite frequent disruptions due to wars and other conflicts. Since
the end of World War II, however, the political structure of the world
has become stable enough to allow for a steady expansion of economic relations
among countries. Through a series of regional and global treaties and agreements
(e.g., European Economic Union, NAFTA, GATT, etc.) and with the help of
international organizations such the IMF, World Bank, and World Trade Organization
the countries of the world have been opening their economies to their neighbors
and, to varying degrees, to other countries. In 1950 the U.S. export (or
import) was only about 4 percent of its GDP, whereas in 2002 over 13 percent
of our national income went to imports and we exported about 10 percent
of our GDP. Contrary to the occasional arguments made in some political
quarters against free trade and economic openness, our economic links to
the other economies of the world have, by and large, brought us markedly
higher standards of living which could easily be observed in both quantity
and quality of the goods and services we consume.
While enjoying the benefits of international trade, we should be mindful
of the drawbacks of international interdependence. One of those drawbacks
is the increasing vulnerability of our economy to the ups and downs of
other economies. Our concerns about economic stagnation in Japan, the value
of Chinese yaun, and macroeconomic stability in the countries of East Asia
and Latin America whose economies are closely linked to ours reflect this
vulnerability. Besides, while on the whole the country has benefited from
free trade and foreign competition, free trade has occasionally brought
about hardship to some of our domestic industries and resulted in significant
sectoral labor displacements (unemployment). Are the costs of these external
disturbances to the economy significant enough to warrant a more conservative
trade policy? Should we protect our weaker industries from foreign competition?
Does everyone benefit from trade equally? Should we trade only with those
countries whose economic systems are similar to ours? Does trade with low-wage
(low-cost) countries like China have negative impacts on our wages and
standards of living? Should we limit our trade with those countries whose
environmental laws are less stringent than ours? Should we let foreigners
invest in the U.S. freely? Should we limit American investments abroad?
Is it a good idea to borrow from abroad to finance our economic growth?
Is it a good idea to borrow from abroad to finance our government deficits?
Has NAFTA been good for the U.S.? Should NAFTA be expanded to include other
Central and South American countries?
The objective of this course is to provide students with a good understanding
of the economic theory of trade and tools of analysis, enabling them to
better understand the trade issues facing us as well as the complexities
of the global economy and international trade relations.
We will start the course with a review of the recent developments in
the world economy. Then we will briefly look at the patterns of trade in
the U.S. with references to the balance of payments and the exchange rate.
Next we will introduce the concept of comparative advantage in the context
of a one-factor world. The specific factors model will be the context in
which we address prices, wages and income distribution. Factor endowments
and the Neoclassical model of trade will be introduced next through which
we will address the impacts of trade on prices and wages in a two-factor
economy. The welfare implications of international trade will be the topic
of our next discussion. Next we will address tariffs and other trade policy
instruments. Economic integration will be the subject of our following
discussion in which we will address NAFTA and its implications for the
U.S., Mexico and Canada. Labor mobility and immigration and capital movements
will be the subjects of our next discussion. Finally, we will examine the
impact of trade on economic development and transition.
REQUIRED TEXTBOOK
Beth V. Yarbrough and Robert M. Yarbrough, The World Economy: Trade
and Finance, Seventh Edition, Thompson/South-Western, New York: 2006
EVALUATION METHODS
The will be two scheduled exams as follows:
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In addition to the above exams students will be given regular quizzes and/or homework assignments. Quizzes and homework assignments carry a total of 10 points which will be added to the points obtained from the schedules tests.
Note: Students who have a disabling condition which might interfere with their ability to carry out the course requirements are encouraged to speak, confidentially, to the class instructor, or to contact the Office of Disability Services.
ATTENDANCE POLICY
Students are strongly urged to attend classes regularly and keep up
with the course coverage and all assignments. Excessive absences could
have an adverse effect on one's final course grade. Make-up tests are given
only when a student misses a test as a result of professionally diagnosed
and treated illness and other verified extenuating circumstances. Make-up
tests may or may not have the same format as the scheduled tests. There
will be no makeups for missed quizzes.
COURSE OUTLINE
Introduction: A brief review of the composition of trade in
the world and in the US
The Theory of Trade: A Brief Historical Review of the Trade Theory
Mercantilism
Classical Views: Adam Smith and Absolute Advantage
Ricardian Comparative Advantage
Neoclassical Trade Theory
Factor Endowments
Production and Consumption under Autarky
Specialization and Productivity
The Heckscher-Ohlin Model
Trade and Economic Welfare
How does trade affect prices?
How do output prices affect factor prices?
Does trade result in factor price equalization?
Do we all gain from trade equally?
Intra-Industry Trade
Trade and Economies of Scale
Trade and Transportation Costs
Trade Models and the Actual Patterns of Trade: A Look at Some Empirical
Evidence
Trade Restricting Instruments
Tariffs
Quotas
Measuring Welfare Effects of Tariffs and Quotas
Tariffs and Factor Prices
The Effective Rate of Protection
Other Trade Barriers
Arguments for Restricting Trade
Trade Agreements and Economic Integration
The Benefits and Costs of Economic Integration (Trade Agreements)
The North American Free Trade Agreement (NAFTA)
Mexico before NAFTA: Maquiladoras
An Evaluation of NAFTA from a Mexican Perspective
An Evaluation of NAFTA from a U.S. Perspective
Trade Restricting Effects of NAFTA
International Factor Movements: Immigration and Multinationals
Trade and Economic Growth
Trade Issues of the Developing World
College Policy on Intellectual Integrity
Intellectual integrity on the part of all students is basic to individual growth and development through college course work. When academic dishonesty occurs, the teaching/learning climate is seriously undermined and student growth and development are impeded. For these reasons, any form of intellectual dishonesty is a serious concern and is therefore prohibited.
The full intellectual integrity policy can be found at http://www.oswego.edu/administration/registrar/policy_text.html#cpii
Note: Students who have a disabling condition which might interfere with their ability to carry out the course requirements are encouraged to speak, confidentially, to the class instructor, or to contact the Office of Disability Services