International Trade: Theory & Policy

The teachers are Ian Wooton from University of Strathclyde (SCH) and Vilém Semerák from VŠE in Prague (CZ).

Students are supposed to have knowledge of Microeconomics at an intermediate level.

Part 1 – Trade Theory

• International trade and factor mobility: The main facts
• Technology, factor endowments and trade
• Export booms
• Does it matter what countries export?
• Trade and imperfectly competitive markets
• Trade and Growth
• Economic geography
• Tax competition and FDI

Part 2 – Trade Policy

• Trade policy in general neoclassical trade model
• Trade policy under imperfect competition: Strategic trade policy
• Applied models of trade policy: From IO analysis to CGE/AGE
• Trade policy and economic integration: Customs unions and FTAs
• Administered protection
• Political economy of trade policy

The course provides a sound theoretical and analytical basis for examining and evaluating the causes and consequences of international trade and factors mobility.

The course is structured around a set of topics which include:

• The determinants of international trade (technological differences, differences in factor endowments, economies of scale and market structure, differences in preferences across countries)
• International labour mobility
• Foreign direct investment and multinational enterprises
• International fragmentation of production (offshore outsourcing)
• International trade policies (with a focus on developing countries)
• Problems of trade in primary commodities

• J.R. Markusen, J.R. Melvin, W. Kaempfer & K. Maskus (1995), International Trade: Theory and Evidence, McGraw-Hill
• C. van Marrewijk (2007), International Economics: Theory, Application, and Policy, Oxford University Press, ISBN 978-0-19-928098-8
• P.R. Krugman & M. Obstfeld (2008), International Economics Theory and Policy, 8th edition, Pearson, ISBN 978-0-321-48883-1
• R.C. Feenstra & A.M. Taylor (2008), International Economics, Worth Publishers, ISBN 978-0-7167-9904-7

Upon successful completion of the course, students should be able:

• To explain why all countries can benefit from international trade, despite differences in production technologies and factor endowments
• To understand the role of differences and similarities between countries in explaining international trade flows
• To predict the pattern of trade between countries and discuss the distributional effects within countries
• To discuss the implications of less-than-perfectly competitive market structures for trade between countries
• To explain the different trade policy instruments available to policy makers and discuss the arguments in favour of, and against, protection
• To analyse and critically assess the options of economic integration available to a country, in terms of free-trade and multilateral agreement
• To understand the causes and consequences of more recent phenomena such as the international fragmentation of production.

The course consists of 150 hours spead over one term. About 40 hours of lectures and workshops are given in three sets of intensive lectures. 90 hours are required for individual study 20 hours are required for active preparation of the intensive lectures, including work with sample exercises and models.

The students are evaluated through a written examination of three hours.