COVENANT UNIVERSITY OTA
COLLEGE OF BUSINESS AND SOCIAL SCIENCES
DEPARTMENT OF ECONOMICS AND DEVELOPMENT STUDIES
COURSE COMPACT for 2014-2015 academic session
Course Code: ECN 316
Course Title: Theory of International Trade
Resource Person(s):
Name
Office Ext. e-mail
Co-ordinator Alege , Philip O. (PhD) B114A 2629 Philip.alege@covenantuniversity.edu.ng
Odebiyi, John. T
F302C 2260 John.odebiyi@covenantuniversity.edu.ng
Assistant
Lecture day and time: Tuesday 10am - 12noon
Location: CDS Building, Hall G301
Brief Overview of the Course:
In this era of globalization and regionalization it is imperative that students of economics
be adequately informed on the theories and policies concerning transactions of goods and
services among nations. This course, therefore, seeks to clarify three issues namely: what
determines the pattern of international trade? What are the welfare implications of such
trade? What are the effects of trade on domestic economy i.e. on internal allocation of
resources: distribution of income, level of unemployment, inflation rate, poverty reduction,
etc.
Objective of the Course:
At the end of the course, students will be expected to be able to analyze major international
trade problems as they are related to the Nigerian economy and propose possible remedial
policies.
Method of Delivery/teaching Aids:
 Lecture delivery method: Lectures are conducted with audio-visuals as well as
multimedia projector.
 Teaching Aids: Magnetic Board, Public Address System (PAC) and lecture notes.
The lecture notes will be available on line. We thus expect you to have gone through
the appropriate chapter before coming to the class. By so doing we would not waste
time in explaining the theories and thereby have enough time to do a reasonable
number of exercises.
Course Outline:
MODULE ONE: The Subject Matter of International Trade
1.1 General Economic Theory versus International Economics
1.2 Importance of International Trade
1.3 Modern Stylized Facts of International Trade
MODULE TWO: The Classical Theory
2.1 The Problem
2.2 The Labour Theory of Value
2.3 The Absolute Advantage Theory
2.4 Comparative Advantage
2.5 Modification of Ricardian Assumptions
2.6 The Supply Side of the Economy
2.7 The Demand Side
2.8 Trade Offer Curve
2.9 Terms of Trade
2.10 Summary and Conclusions
MODULE THREE: HECKSCHER-OHLIN Factor Endowment Model
3.1 Introduction
3.2 Some Definitions
3.3 The Assumptions
3.4 H-O Theorem: Factor Abundant Defined in Terms of Factor Prices
3.5 H-O Theorem: Factor Abundant Defined in Physical Terms
3.6 Comparison between the Classical and H-O Theorem
3.7 Summary and Conclusions
MODULE FOUR: The Leontief Paradox
4.1 Introduction
4.2 Explanation of the Paradox
4.3 Summary and Conclusions
4.4 Exercises
MODULE FIVE: Effect of Growth on Trade
5.1 Introduction
5.2 Possible Sources of Growth
5.3 Types of Growth
5.4 Classification of Consumption Effect
5.5 Summary and Conclusions
5.6 Exercises.
MODULE SIX: Rybczyski Theorem
6.1 Introduction
6.2 Growth of Scarce Factor
6.3 Growth, Terms of Trade and Welfare
6.4 Summary and Conclusions
6.5 Exercises.
MODULE SEVEN: The Theory of Customs Unions
7.1 Introduction
7.2 The Theory of the Second Best
7.3 Forms of Preferential Trading Arrangement
7.4 Trade Creation
7.5 Trade Diversion
7.6 Summary and Conclusions
7.7 Exercises
Tutorials: Tutorials are organized on relevant topical issues which should enhance
students’ understanding of the course.
Structure of the Programme/Method of Grading
There are three levels stated as follows: End of Semester Examination: 70%; Mid-Semester
Examination: 15%; and Class Work: 15%. The class work will consist of an impromptu
test, attendance and take-home assignments designed to help students maximize their
understanding and by implication their final grade.
Ground Rules/Regulations
 Students are expected to be in class before commencement of lectures. They are
equally expected to be well-behave so that the aims of the course will be achieved.
 Entrance into the lecture halls is not condoned ten minutes into the lecture.
 Students are encouraged to participate actively in class during interactive sessions.
 Prior notice should be given if a student will absent from any class.
Topics for the Term Papers/Assignments/Students Activities
Students are organized into groups of maximum of four. Each group is expected to choose
a research area in international trade. And with their knowledge in economics and statistics,
they are expected to present a mini-project on the area chosen.
Alignment with Covenant University Visions/Goals
The course content and delivery is in line with the university’s visions and goals in the
sense that it prepares students who will take up leadership positions in local, regional and
international institutions.
Contemporary Issue/Industry Relevance
Examples are drawn from current international trade related issues particularly as it
concerns trade flows and policy implications.
Recommended Reading/Texts:
1. Pugel, T.A. (2004), International Economics McGrall-Hill
2. Ethier, W. (1983), Modern International Economics, Norton.
3. Sodersten, BO (1980), International Economics, Macmillan
4. Kenen, P.B. (1996), The International Economy,Cambridge