88079 - INTERNATIONAL ECONOMICS

Learning outcomes

At the end of the module, students: - learn the causes and consequences of international trade, the effects of trade policies, the causes of international factor movements, the role of foreign direct investements in multinational operations and the role of the World Trade Organization. - have acquired an empirical and theoretical understanding of the complex issues raised by the economic interdependence of nations and will be able to analyze them in a systematic way.

Course contents

This course gives an overview of the causes and consequences of international trade, as well as of the institutional context in which trade and international factor movements take place in the modern economy.

The first part of the course introduces the main theoretical frameworks used to explain international trade patterns, the gains from trade, and the effects of trade on welfare and income distribution. It covers classical, neoclassical and selected post-Heckscher-Ohlin approaches, with brief reference to empirical applications.

The second part of the course focuses on trade policy and trade governance. It examines the efficiency and redistributive effects of tariff and non-tariff barriers, the main arguments for trade protection, the political economy of trade policy, preferential trade agreements, regional economic integration, and the role of the GATT/WTO system in the world trading system.

The course also introduces international factor movements, with attention to foreign direct investment, multinational corporations and labour movements between countries.

Some knowledge of the basic principles of microeconomics is useful for this course, together with an understanding of high-school linear algebra and graph analysis using Cartesian axes. More advanced microeconomic tools required to understand specific topics will be introduced during the course, including through a dedicated tutorial session that forms part of the teaching activity.

 

Course Outline

1. Introduction to the World of International Economics. Early trade theories. The classical theory of trade: the Ricardian model.
2. Extensions to the Ricardian Model. Wage and exchange-rate limits, transportation costs, multiple commodities and countries.
3. Setting up the Neoclassical Model. The concave Production Possibilities Frontier. Gains from trade in neoclassical theory: production and consumption gains. Minimum conditions for trade and the compensation principle.
4. The Basis for Trade in the Heckscher-Ohlin Model. Factor abundance and factor intensity. The factor-price equalization theorem and the Stolper-Samuelson theorem. Theoretical qualifications of the Heckscher-Ohlin model.
5. Post-Heckscher-Ohlin Theories of Trade. Linder’s theory, Vernon’s product cycle model, and the Krugman model. Intra-industry trade.
6. International Factor Movements. Foreign direct investment and multinational corporations. Labour movements between countries.
7. The Instruments and Impacts of Trade Policies.
8. Arguments for Interventionism. Trade policy and imperfect competition.
9. The Political Economy of Trade Policy. Multilateral negotiations.
10. The Theory of Regional Economic Integration. Trade creation and trade diversion.

Readings/Bibliography

Required materials for exam preparation

The required materials for the preparation of the exam are:

• the course textbook;
• the lecture slides prepared by the instructor;
• the additional teaching materials made available by the instructor during the course.

The course textbook is:

M. Alvisi (2023), International Economics LEGO, McGraw Hill CREATE, ISBN: 9781307917963.

This is a customized textbook prepared for this course, largely based on Dennis R. Appleyard and Alfred J. Field (2017), International Economics, McGraw Hill, 9th ed.

The textbook, including the ebook version, is available for purchase on major online platforms, such as Amazon, IBS and Mondadori Store. Some printed copies are available at the library of the Department of Sociology and Business Law.

Lecture slides and additional teaching materials will be made available during the course on the University’s teaching platform, Virtuale: https://virtuale.unibo.it/

Additional materials may include lecture notes and other resources prepared by the instructor. These materials are intended to complement the textbook, especially with reference to recent developments in trade policy, international institutions and the world trading system.

Recommended and further readings

Further readings may be suggested during the course for students interested in deepening specific topics. Unless explicitly indicated by the instructor, these readings are recommended but not required for the exam.

Teaching methods

The course is based on face-to-face lectures.

Lectures introduce the main theoretical models, institutional frameworks and policy issues covered in the course. Students are encouraged to read the relevant material before each lecture and to participate through questions and discussion.

A dedicated tutorial session will introduce or review the basic microeconomic tools required to understand selected topics.

The material related to each lecture will be indicated in the detailed syllabus made available at the beginning of the course on the University’s teaching platform, Virtuale: https://virtuale.unibo.it/

Assessment methods

Attending students

For students attending lectures, defined as students attending at least 6 out of 10 lectures, the final grade is based on:

1. Class attendance and participation: 10% of the final grade.
   This component assesses students’ active participation and their ability to discuss the topics covered during the course.
2. Two written tests: 90% of the final grade.
   The first written test accounts for 40% of the final grade, while the second written test accounts for 50% of the final grade.

Each written test is a closed-book written examination lasting 1 hour and 15 minutes. It assesses the theoretical knowledge acquired during the course and the student’s ability to use the concepts, models and terminology introduced in class.

Each test consists of:

• 1 open-ended question, to be chosen from 2 available questions, worth up to 16 points;
• 4 multiple-choice questions, to be chosen from 6 available questions, worth up to 4 points each. For each multiple-choice question, students are required to justify their answer on the basis of the theory studied during the course.

Each written test is worth a maximum of 32 points and is considered passed with a score of at least 15/30. For attending students, the overall exam is considered passed if the weighted average of the two written tests and class attendance/participation is at least 18/30. A final grade of 30 cum laude is awarded when this weighted average is at least 31/30.

 

Non-attending students

For non-attending students, the assessment is based entirely on a 2-hour closed-book written examination covering the whole programme.

The exam assesses the theoretical knowledge acquired through the textbook, lecture slides and additional teaching materials made available by the instructor. It also evaluates the student’s ability to use the concepts, models and terminology of the course to analyse international trade, trade policy and the world trading system.

The exam consists of:

• 2 open-ended questions, worth up to 7 points each;
• 6 multiple-choice questions, worth up to 3 points each. For each multiple-choice question, students are required to justify their answer on the basis of the theory studied during the course.

The exam is worth a maximum of 32 points. Students obtaining 31 or 32 points are awarded 30 cum laude. The exam is considered passed with a score of at least 18/30.

Grading criteria

In their answers, students are expected to demonstrate sound knowledge of the topics covered in the course, the ability to develop a clear and coherent economic analysis, and appropriate use of technical terminology.

For the written tests taken by attending students, the open-ended question is assessed as follows:

• 16 points: excellent answer, showing excellent command of the topic, full correctness and completeness, excellent analytical ability, and precise use of economic terminology;
• 14–15 points: very good answer, correct, complete and well structured, with very good analytical ability and appropriate use of economic terminology;
• 11–13 points: good answer, substantially correct and sufficiently complete, with good analytical ability and generally appropriate use of economic terminology;
• 9–10 points: sufficient answer, broadly correct and showing adequate understanding of the main concepts, although with some limitations in completeness, analytical depth or use of technical terminology;
• below 9 points: insufficient answer, due to serious gaps, relevant mistakes, lack of theoretical justification, off-topic content, or inadequate use of economic terminology.

For the multiple-choice questions in the written tests taken by attending students, each answer is assessed as follows:

• 4 points: correct answer with excellent theoretical justification;
• 3 points: correct answer with good theoretical justification;
• 2 points: correct answer with partial but acceptable theoretical justification;
• 0–1 points: incorrect answer, missing answer, or answer with seriously inadequate justification.

For the written examination taken by non-attending students, the open-ended questions are assessed as follows:

• 7 points: excellent answer, showing full correctness and completeness, excellent analytical ability, and precise use of economic terminology;
• 6 points: very good answer, correct and complete, with very good analytical ability;
• 5 points: good answer, substantially correct and sufficiently complete;
• 4 points: sufficient answer, broadly correct, although with some limitations in completeness, analytical depth or use of technical terminology;
• below 4 points: insufficient answer, due to serious gaps, relevant mistakes, lack of theoretical justification, off-topic content, or inadequate use of economic terminology.

For the multiple-choice questions in the written examination taken by non-attending students, each answer is assessed as follows:

• 3 points: correct answer with good theoretical justification;
• 2 points: correct answer with partial but acceptable theoretical justification;
• 1 point: answer showing limited understanding or weak theoretical justification;
• 0 points: incorrect answer, missing answer, or answer with seriously inadequate justification.

Materials allowed during the exam

The exam is closed-book. Textbooks, lecture notes, slides, dictionaries, smartphones, smartwatches, tablets, laptops and other electronic devices are not allowed.

Non-programmable calculators are allowed. No substitutes, including mobile phones or similar devices, are permitted.

Generative AI

As regards assessment, the use of generative AI is prohibited. Any use of generative AI tools constitutes a violation of academic integrity.

Students with disabilities or specific learning disorders

Students with disabilities or specific learning disorders, whether temporary or permanent, are invited to contact the relevant University office in due time:
https://site.unibo.it/studenti-con-disabilita-e-dsa/en

The office will propose possible adaptations, which must be submitted to the instructor for approval at least 15 days in advance. The instructor will assess their appropriateness in relation to the learning objectives of the course.

a=1a=1

Teaching tools

Slides and other teaching materials will be made available on the course website through Virtuale: https://virtuale.unibo.it/

The materials may include lecture slides, lecture notes, additional readings prepared by the instructor, and other resources supporting the study of the topics covered in class.

During the first two weeks of the course, students will be offered a review session and additional materials on the basic microeconomic tools used in the remainder of the course.

Generative AI tools may be used as a support for individual study, for example for summaries, review of key concepts and self-assessment. However, they do not replace the textbook, lecture slides, teaching materials made available by the instructor, or the student’s own critical understanding of the course contents. Their use is not allowed during exams, as specified in the assessment methods section.

Office hours

See the website of Matteo Alvisi