HIGHER SCHOOL OF ECONOMICS
DEPARTMENT OF ECONOMICS
INTERNATIONAL TRADE
February 7 – June 13, 2013
Syllabus
Duration: 32 lectures over 16 weeks
Lectures: Thursdays, 16:40-19:30.
Room: 5215
Professor: Eren Arbatli
Office: Shabolovka Campus, room 3116 A
E-mail: earbatli@gmail.com
Office Hours: Mondays, 11:00-13:00
TA: Olga Zyuzina
E-mail: ozyuzina@hse.ru
TA sections: TBA
PRE-REQUISITE
Microeconomics 1-2 and Macroeconomics 1-2
COURSE DESCRIPTION
This course aims to introduce students to both classical and modern theories of international trade in goods
and services. In particular, the goal of this class is to understand three main issues: (i) the pattern of
international trade; (ii) the effect of trade on income distribution; and (iii) the effect of trade policy on a
country’s welfare. The class will use two integrated approaches. First, it will develop several theoretical
models of international trade. The models will provide a framework to think about international trade
problems. Second, the class will present important contemporary debates on issues such as globalization,
strategic trade, agricultural subsidies, bilateral trade agreements and the work of the WTO.
ASSESSMENT
There will be two exams: One towards the end of 3rd module (March 25-29) and one at the end of the course
(final exam).
The final grade consists of the following elements:
 Home assignments – 25%
 Mid-course exam – 25%
 Final exam – 50%
I expect class participation from students throughout the semester. An outstanding participant will routinely
voice good comments, and always be on time for class. A good participant will occasionally express insightful
comments, and be on time for class. I expect you all to be good or exceptional participants.
READINGS AND RESOURCES
1. Textbook: Krugman, Paul and Maurice Obstfeld, International Economics: Theory and Policy, 8th
edition. (Addison Wesley).
2. Special Readings and web pages will be sent via course group e-mail.
TENTATIVE COURSE OUTLINE
Motivation: The Latest Research
If you’d like, see these articles:
Eichengreen, Barry, and Douglas Irwin, “The Protectionist Temptation: Lessons from the Great Depression
for Today” in http://www.voxeu.org/article/protectionist-temptation-lessons-great-depression-today
Andrew Rose “The International Economic Order in the Aftermath of the Great Recession”, in
http://faculty.haas.berkeley.edu/arose/Brown.pdf
Chapter 1: Introduction
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Important issues in international trade
Gains from trade
Pattern of trade
How much trade?
Articles: Trade Bounty, the Economist, 12/2/04
In the steps of Adidas, the Economist, 2/8/07
Opening the Floodgates, the Economist, 5/7/09
Quinoa’s Global Success Creates Quandary at Home, New York Times, 3/19/11
Chapter 2: The Gravity Model & Changing Patters of Trade
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Who trades with whom?
Changing pattern of world trade
Articles:
New York Times, “Outsourcing is Climbing Skills Ladder”, 2/16/06
S. Edwards, How Chile Can Make the Most of its US Trade Deal, WSJ 1/3/03, in
http://www.anderson.ucla.edu/faculty/sebastian.edwards/TheWallStreetJournal_Chile2003.pdf
Frankel, Jeffrey and E. Cavallo, Trade Openness Reduces Financial Vulnerability, in
www.nber.org/digest/jul05/w10957.html
Sala-i-Martin, Xavier, Economic Growth is Reducing Global Poverty, in
www.nber.org/digest/oct02/w8933.html
Wei, Shang-Jin and Y. Wu, Globalization Reduces Inequality in China, in
www.nber.org/digest/mar02/w8611.html
Hanson, Gordon, Globalization and Poverty in Mexico, in
www.nber.org/digest/apr05/w11027.html
Chapter 3: The Ricardian Model
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Ricardo and Comparative Advantage
Empirical Evidence on the Ricardian Model
Articles:
Faster, cheaper, better, The Economist, 11/11/04
A world of opportunity, The Economist, 11/11/04
Paul Krugman “Reckonings: Hearts and Heads”, the NY Times, 4/22/01
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Paul Krugman “Wal-Mart excuses”, the NY Times, 12/12/05
Edmonds, Eric & N. Pavcnik “Globalization reduces child labor in Vietnam”, in
http://www.nber.org/digest/jul02/w8760.html
Doubts on Cheap Labor, Financial Times, 4/5/11
Chapter 4: The Heckscher–Ohlin Model
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Effects of International trade between two-factor economies
Factor-price equalization
Distributional consequences of trade
Articles:
Hanson, Gordon “What happened to wages in Mexico since NAFTA?” in
http://www.nber.org/digest/sep03/w9563.html
The Caribbean, The Economist 9/22/05
Blinder, Allan: “Free Trade’s Great But Off-shoring Rattles Me”, Washington Post, 5/8/07, in
http://www.washingtonpost.com/wp-dyn/content/article/2007/05/04/AR2007050402555.html
Greg Mankiw’s blog on the subject, in http://gregmankiw.blogspot.com/2007/05/blinder-on-offshoring.html
NY Times, "Why Is Income Inequality in America So Pronounced? Consider Education", May 17, 2007
Chapter 5: The Standard Trade Models and Country Welfare
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A standard model of a trading economy
Welfare effects of changes in the terms of trade
Article:
Sokoloff, K. et.al. “Global links raise Asian countries’ productivity” in
http://www.nber.org/digest/aug02/w8894.html
Wacziarg and Horn Welch, “Trade Liberalization and Growth: New Evidence”, Oxford University Press, 2008
Chapter 6: Economies of Scale & Imperfect Competition & Technology
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Economies of scale and the theory of imperfect competition
Monopolistic Competition and Trade
Protection and imperfect competition
Theory of External economies
External economies and international trade
Articles:
Friedman, Thomas “Losing our edge”, NY Times, 4/22/04
Poverty’s chains, The Economist, 10/9/03
Mankiw, Gregory and P. Swagel “Antidumping: The third rail of trade policy”, Foreign Affairs, Dec. 2005
Stepping Up the Pressure Against Piracy in China, NY Times, 12/6/04
The Miracle of the Cerrado, the Economist, 8/26/10
Chapter 7: Immigration & capital movements
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International labor mobility
Direct foreign investment and multinational firms
Articles:
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Brown, D, A. Deardorff & R. Stern “Multinationals, wages & working conditions in developing countries”,
NBER Digest, October 2003, in http://www.nber.org/digest/oct03/w9669.html
The brain drain cycle, The Economist, 12/8/05
Myths and Migration, The Economist, 4/6/06
Footloose firms, The Economist, 5/25/04
Damuri and Peri, “Immigration: Evidence from Europe”, NBER Working Paper 17139, June 2011
Chapter 8: Trade Policy
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Economics of tariffs and export subsidies
Economics of Quotas
Voluntary Export restraints and local content requirements
Articles
Europe’s farm follies, The Economist, 12/8/05
A harvest of disgrace. The Eonomist,.5/22/08
The Doha round. The Economist, 7/31/08
Dead Man Talking, The Economist, 4/28/11
Chapter 9: Protection, Free trade & the WTO
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The case for free trade
National Welfare arguments against free trade
Income Distribution and Trade Policy
International negotiations and trade policy
Articles:
Trefler, Daniel, The Long and Short of the Canada-US FTA, AER, Sept. 2004
In the rough, The Economist, 11/3/05
Do despair, The Economist 7/8/05
Tang, Man-Keung and Shang-Jin Wei, “The Value of Making Commitments Externally: Evidence from WTO
Accessions”, www.voxeu.org/index.php?q=node/2816
Irwin, Douglas, GATT Turns 60”, www.dartmouth.edu/~dirwin/GATT%20at20%2060.html
Round One, Boeing. The Economist, Sept 4, 2009.
Defying Gravity and History. The Economist, 8/5/10 (just to read)
The WTO and China, The Economist, 7/7/11
Chapter 10: Trade policy in Developing Countries
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Import Substitution and Infant Industry argument
Export-oriented development strategies
Chapter 11: Controversies in Trade Policy
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Sophisticated Arguments for Activist Trade Policy
Globalization and Low-Wage Labor
Globalization and the Environment
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