The module aims to introduce students to the main theoretical and empirical concepts in international trade, equip students with a thorough analytical grasp of trade theory, ranging from Ricardian comparative advantage to modern theories of intra-industry trade, and familiarise students with the main issues in trade policy and with the basic features of the international trading regime. At the end of the course, the students should be able to demonstrate their understanding of the economic concepts of trade theory. In some models, the student will be required to deal with simple algebraic problems that will help them to better understand these concepts, use diagrammatic analysis to demonstrate and compare the economic welfare effects of free trade and protection, demonstrate their understanding of the usefulness and problems related to topics in international trade, and demonstrate their critical understanding of trade policies.
What is international economics about? An overview of world trade. Stylized facts about international trade
2. Neo Classical Trade Theories:
Ricardian trade theory (notion of comparative advantage and gains from trade due to specialisation); an introduction to the distributional effects of trade; the specific factor model; Heckscher-Ohlin theory: Rybczinski and Stolper-Samuelson theorems; Heckscher-Ohlin theorem; factor price equalisation
3. New Trade Theories:
External economies of scale, internal economies of scale; the Krugman model; firm heterogeneity; international movement of factors; introduction to the theory of multinational firms
4. Trade Policy:
Instruments of trade policy; tariffs, quotas, export subsidies, voluntary export restraints. The economics of trade policy; political economy of trade policy; controversies in trade policy
NOTE: The above modules give a rough idea about the topics covered in our International Economics course. Students will be given modules as per their respective Universities outline after prior discussion.