Aims: The aim of the course unit is to introduce theory relevant for analysis of the economics of open economies. Theory is applied to current issues relating to international trade, international movement of factors of production and international monetary economics. This course unit can be studied as a self-contained module but it also forms a useful introduction to a more specialist stream in EC30027 International Monetary Economics and EC30034 International Trade in the final year of degree programmes.
Learning Outcomes:
Students will have developed a fuller knowledge and understanding of the international economy, and the relevance of theory. They will have acquired greater awareness of economic debates, especially as these relate to developing countries.
Skills:
Students will become skilled in understanding and applying theory, which will be tested in a written examination.
Content:
The first part of the unit focuses on international trade theory and applications. Topics include: comparative advantage and the gains from trade; costs of protection; trade taxation as a revenue source; the optimum tariff and its relevance for exports from developing countries; the infant industry argument; import substitution and export promotion policies; the welfare effects of international movement of factors of production; multinational investment; emigration and the 'brain drain' from developing countries.
The second part of the unit focuses on international monetary economics. Topics include: the nature and significance of the balance of payments; parity concepts; devaluation; open economy macroeconomics; international policy co-ordination; international debt and models of exchange rate crises.
Key Texts: KRUGMAN, P. R, and OBSTFELD, M. International Economics, 7th edition, Addison Wesley, 2005.
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