Instructor: Paul Hancock Office: Moses 155 Hours: MW 10-12 (X8324)

International Trade Econ 3033

Fall 2006 TF 11-12:15

Trade liberalization has been a topic of increasing interest as the world economies become more integrated. The violent clashes in Seattle, Quebec and Genoa demonstrate that significant groups in society oppose the consequences of globalization. Free trade advocates argue that the world is a better place without restraints on global market forces.

As we develop the theories of international trade and trade policy we will address the following questions.

· Why do countries trade?

· Do only some countries benefit from trade?

· Why do countries use tariffs, quotas and other forms of intervention?

· What role do free trade agreements (e.g., NAFTA) and the World Trade

Organization have in establishing a trade environment?

· What impact does trade have on income inequality and the plight of

developing countries?

· How does trade affect the environment?

Text: Krugman and Obstfeld. International Economics: Theory and Policy,7th edition

Format: Lecture and discussion. The text provides a grounding in the theoretical models of orthodox trade theory. Initially we will focus on developing a sound understanding of these models while making note of their important deficiencies. Overlapping this part of the course and extending to the end of the semester will be a focus on policy issues and controversies between orthodox and heterodox perspectives.

Graded Requirements	Weight
Homework assignments (due 9.26, 10.27, 11.14) Term Paper (due 11.21) Presentations (11.28, 12.1, 12.5) Final Exam Discussion	15% 25% 15% 30% 15%

Outline and Readings

All readings will be placed on reserve in the library with the exception of the textbook and the JSTOR on-line articles – to access these articles simply click on the article title.

Days Topic and Readings

8.29	Introduction

Comparative Advantage and the Ricardian Model of Trade
9.1, 9.5	Krugman and Obstfeld, chap. 2 Krugman, Paul. 1995. “Growing World Trade: Causes and Consequences.” Brookings Papers on Economic Activity. 1: p.327-342.
Specific Factors and Income Distribution
9.8, 9.12	Krugman and Obstfeld, chap. 3
The Heckscher-Ohlin Model
9.15, 9.19	Krugman and Obstfeld, chap. 4
Trade and Income Distribution
9.22				Freeman, Richard. “Are Your Wages Set in Beijing?” Journal of Economic Perspectives. Summer 1995, 15-32. Wood, Adrian. “How Trade Hurt Unskilled Workers.” Journal of Economic Perspectives. Summer 1995. 57-80. Bhagwati, Jagdish, and Dehejia, Vivek. “Freer Trade and Wages of the Unskilled: Is Marx Striking Again?” in Bhagwati, Jagdish, ed. Trade and Wages: Leveling Wages Down? 1994. Stanford, Jim. “Openness and equity: regulating labor market outcomes in a globalized economy.” in Baker, Dean; Epstein, Gerald; Pollin, Robert, ed.s Globalization and Progressive Economic Policy. 1998. Gordon, David M. Fat and Mean: The Corporate Squeeze of Working Americans and the Myth of Managerial Downsizing. 1996: pp. 187-197.
Demand and Supply in an Open Economy
9.26				Krugman and Obstfeld, Chap. 5
Instruments of Trade Policy
9.29-10.3				Krugman and Obstfeld, Chap. 8 Feenstra, Robert C. “How Costly is Protectionism?” Journal of Economic Perspectives. Summer 1992. 159-178. Larudee, Mehrene, “Trade Policy: Who Wins, Who Loses?” in Epstein, Gerald; Graham, Julie; and Nembhard, Jessica for the Center for Popular Economics, eds. Creating A New World Economy: Forces for Change and Plans for Action. 1993: pp. 47-63.
Political Economy of Trade Policy
10.6, 10.13				Krugman and Obstfeld, chap. 9 Krueger, Anne O. “Administered Protection.” Chap. 3 of American Trade Policy: A Tragedy in the Making. 1995: pp. 33-50. Mastel, Greg. Antidumping Laws and the U.S. Economy. 1998. Chap. 1 and Chap. 7. Nelson, Douglas R. “The Political Economy of U.S. Automobile Protection.” In Krueger, Anne, ed. The Political Economy of American Trade Policy. 1995: pp. 133-185.
				Increasing Returns and Imperfect Competition
10.17-10.20  10.24 10.27				Krugman and Obstfeld, chap. 6 Krugman, Paul. “Is Free Trade Passe?” Journal of Economic Perspectives. 1 (87) 3-12.
				Strategic Trade Policy
				Tyson, Laura D’Andrea. Who’s Bashing Whom? 1992.chap. 1-2. Krugman, Paul. Pop International, (1996), chap. 7: “Economic Shuttle Diplomacy: A Review of Laura D’Andrea Tyson’s Who’s Bashing Whom?” pp.105-116.
				Case: The Commercial Aircraft Industry
				Tyson, Laura D’Andrea. Who’s Bashing Whom? (1992), chap. 5: “Industrial Policy and Trade Management in the Commercial Aircraft Industry.” 155-216.  Harvard Business School Case. “Bombardier: Canada versus Brazil at the WTO” February 2003.
Trade Policy in Developing Countries
10.31, 11.3  11.7, 11.10				Krugman and Obstfeld, chap. 10 Rodrik, Dani. The New Global Economy and Developing Countries: Making Openness Work. Washington: Overseas Development Council 1999. chap. 1-3 and chap. 6. Krueger, Anne, Trade Policies and Developing Nations. (1995), pp. 1-36.
				The East Asian Experience
				Krugman, Paul. “The Myth of Asia’s Miracle.” In Krugman, Paul. Pop Internationalism. 1996. 167-187. World Bank. The East Asian Miracle. (1993), overview (p.1-26) and chap. 6, p.292-341. Felix, David. “Asia and the Crisis of Financial Globalization.” In Baker, Dean et al. Globalization and Progressive Economic Policy. 1998. 163-191.
Factor Mobility
				Immigration
11.14				Krugman and Obstfeld, chap. 7, pp. 159-166. Borjas, George. “The Economic Benefits from Immigration,” Journal of Economic Perspectives. Spring 1995. 3-22. Sutcliffe, Bob. “Immigration and the World Economy.” in Epstein, Gerald et al. Creating a New World Economy… chap. 4.
				Capital Mobility, the Trade Deficit and the Global Financial Order
11.17				Krugman and Obstfeld, chap. 7, pp. 167-169. Grabel, Ilene. “Crossing Borders: A Case for Cooperation in International Financial Markets.” in Epstein, Gerald et al. Creating a New World Economy… chap.3. Mann, Catherine. Is the U.S. Trade Deficit Sustainable? Washington: Institute for International Economics, 1999. See chaps.2, 3, 6 and 7.
Multinational Corporations
11.21-11.28			Krugman and Obstfeld, chap. 7, pp. 169-177. Bryan, Dick. “Global accumulation and accounting for national economic identity,” Review of Radical Political Economics 33 (2001) 57-77. Gordon, David M. Fat and Mean: The Corporate Squeeze… pp. 195-196. Graham, Edward M. Fighting the Wrong Enemy: Antiglobal Activists and Multinational Enterprises. Washington: Institute for International Economics. 2000.chap.4-5.
Trade and the Environment
12.1			Daly, Herman E. “Problems with Free Trade: Neoclassical and Steady-State Perspectives,” in Zaelke, ed. Trade and the Environment: Law, Economics, and Policy. 1993, 147-157. Falk, Richard. Predatory Globalization: A Critique. (1999), chap. I. Bhagwati, Jagdish. “Trade and the Environment: The False Conflict?” in Zaelke, ed. Trade and the Environment: Law, Economics, and Policy. 1993, 159-188. Esty, Daniel C. Greening the GATT: Trade, Environment and the Future. (1994), pp. 9-32
The Institutions of World Trade
		GATT and the WTO
12.5  12.8		Jackson, John H. The World Trading System: Law and Policy of International Economic Relations. 1997. chap. 2.
		Regional Trading Blocs, e.g. NAFTA
		Frankel, Jeffrey. Regional Trading Blocs in the World Economic System. 1997. chap.1-2. Larudee, Mehrene. “Integration and income distribution under the North American Free Trade Agreement: the experience of Mexico,” in Baker et al, ed. Globalization and Progressive Economic Policy, 1998, chap.11. Krugman, Paul. “The Uncomfortable Truth about NAFTA.” in Krugman, Paul. Pop Internationalism. 1996. 155-165.
Presentations (11.28, 12.1, 12.5)
Final Exam