84562 - Globalization: Trade, Migrations And Multinationals

Learning outcomes

The students learn to interpret and understand the process of globalization from the viewpoint of international trade in goods and services and factor movements. They learn the causes and consequences of international trade, the effects of trade policies, the causes of international factor movement and multinational operations, and the role of the World Trade Organization. Upon completing the course students will have acquired an empirical and theoretical understanding of the complex issues raised by the economic interdependence of nations and to analyze them in a systematic way.

Course contents

Module 1 (prof. Stefano Bolatto)

Trade and technology: the Ricardian model. Absolute vs. comparative advantages; Opportunity cost and the production possibility frontier; Definition of autarky equilibrium; the free-trade equilibrium; Terms of trade and international prices; Export supply and Import demand curves.

Trade and factor endowments: The Heckscher-Ohlin model. Overview and key assumptions; Factor intensity; Leontief’s paradox; Factor prices and commodity prices; Stolper-Samuelson theorem; Theorem of equalization of factors prices; Rybczynski theorem.

Trade under increasing returns to scale and imperfect competition. Market power, product differentiation and oligopoly structures; Pro-competitive effect of trade; Selection and variety effects; Intra-industry trade and gravity.

Multinational firms and Foreign Direct Investment. Offshoring: theory, politics and benefits; Stylized facts about multinational enterprises; Taxonomy of FDI (horizontal vs. vertical; brownfield vs. greenfield); A simple framework for the choice of horizontal FDIs vs. export and for vertical FDIs; Internalization choice: outsourcing vs. offshoring.

Module 2 (prof. Emanuele Forlani)

Specific Factor Model: Factor prices and marginal product of inputs.

Empirical Topics: Country, sector, and firm level data; trade and migration data sources, self-selection of exporting firms; intra industry trade; gravity model and trade elasticity; gravity model for migration.

Trade Policy: Simple model of trade policy. Terms of trade. Trade policy instruments: tariffs, quotas, subsides, etc.. WTO rules: most favoured nation principles, multilateralism vs unilateralism. Preferential Trade Agreements and Regional Trade Agreements. Non-Tariff trade measures.

Readings/Bibliography

“International Trade”, by Robert Feenstra and Alan Taylor, Worth Pub., 4th edition (2016)

Additional (recommended) readings:

Krugman P. R., Obstfeld M., Melitz M. J. (2015) “International Economics: theory and policy”, Pearson.

Barba Navaretti, G. and Venables, A. (2006) “Multinational Firms In The World Economy”, Princeton University Press.

Additional readings will be given during the course. The lecture notes will be made available on the IOL platform

Teaching methods

Lectures and exercises in class.

Assessment methods

The final mark for this exam will be determined as follows:

5O%: mark of the midterm relative to module 1, in form of written exam

5O%: mark of the midterm relative to module 2, in form of written exam

In case of a positive final mark the student has the right to renege on the mark only once.

Teaching tools

Teaching material (lecture notes, further readings, and exercises) will be uploaded on IOL

Office hours

See the website of Emanuele Forlani

See the website of Stefano Antonio Bolatto