Download Introduction to the course - Universidad Autónoma de Madrid

Lecture-0
Topics in International Trade and Political
Economy
An overview of the course
Carlos Llano
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1. Introduction
How deep the globalization process is?
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International Trade of Goods in the World. 2006
Figure 1.2 World Trade in Goods, 2006 ($ billions)
Feenstra and Taylor: International Trade, Second Edition
Copyright © 2011 by Worth Publishers
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Figure 1.3 Trade in Goods and Services Relative to GDP
Feenstra and Taylor: International Trade, Second Edition
Copyright © 2011 by Worth Publishers
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Figure 1.4 Average Worldwide Tariffs, 1860–2000
Feenstra and Taylor: International Trade, Second Edition
Copyright © 2011 by Worth Publishers
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•
Warning: The recent evolution of “Trade/GDP”
Facts: downturn evolution of the ratio between Trade/GDP in the world between 2005-2017.
Causes:
• Composition: model of growth (goods / construction / services). Parts of GDP (C; I; G)
• Globalization peak: Insourcing; Changes in China`s “growth model: upstream movement within the
global value-chain.
• Protectionism!
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Simulation Hypothesis
World GDP
-1,5% in the Short term
-2% in the Long term
World Trade
- 15%
Source: World Economic Outlook. IMF. October 2016
•
The IMF has recently published (October 2016) a simulation analysis for a potential increase in
protectionism, which will take the form of a 10% increase in import prices in 3 years (50% in
tariffs; 50% non-tariff barriers).
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Potential effects over the Spanish Economy
With the scenario drawn by the IMF:
• The Spanish economy will reduce the GDP in 0.5 to 1 p.p. each year.
• With an impact in “loss of employment” of around 1 million people till 2030.
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Potential effects over the Spanish Economy
With the scenario drawn by the IMF:
• The Spanish ratio between Public Debt/GDP will rise above 120%.
• The Spanish ratio between Current Account Deficit/GDP will drop again to 10% (similar
levels to the ones observed before the crisis).
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Migrants in the World. 2005.
Figure 1.6 Foreign-Born Migrants, 2005 (millions)
Feenstra and Taylor: International Trade, Second Edition
Copyright © 2011 by Worth Publishers
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The current Refugees
Crisis in Europe.
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Foreign Direct Investment (FDI) in the World. 2010.
© 2014 Worth Publishers International Economics, 3e | Feenstra/Taylor
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Schedule and syllabus
Week 1 (January 9th -11th). Classic and neoclassic models.
• Computer Lab 1.
Week 2: (January 16th -18th). New Trade Theory.
• Economies of Scale, Imperfect Competition, and International Trade.
Week 3: (January 23th -25th). Trade: Empirical analysis.
• Computer Lab 2. Intra-industry trade using Excel and STATA.
• Computer Lab 3. The gravity model. Applied laboratory with STATA.
Week 4: (January 30th – February 1st). Recent developments in international trade I/II:
• Introduction to Economic Geography.
• The Spatial Dixit-Stiglitz model
• The New Economic Geography: the Core-Periphery Model.
Week 5: (February 6th-8th). Recent developments in international trade II/II:
• The New Economic Geography and International trade
• New topics: Heterogeneous firms; FDI and multinationals; Economic Complexity; Valuechain fragmentation and international trade.
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Materials
Studding materials:
 Power point presentations: Summary of the main concepts.
 Photocopies for some chapters.
Additional material: papers, readings...
Abbreviation
Main References
F&T -2010
Feenstra and Taylor. (2010): International Economics. Worth Publishers; 2 Ed.
BGM -2009
Brakman S., Garretsen H. van Marrewijk C. (2009): The New Introduction to
Geographical Economics. Cambridge University Press.
FKV-1999
Fujita, M.; Krugman, P.; Venables, A. (1999): The Spatial Economy. The MIT
Press. Cambridge, Massachusetts. London, England*.
KO-2005
Krugman, P., Obstfeld M. and Melitz (2012): International Economics: Theory and
Policy. Addison-Wesley.
TWB-08
The World Bank (2008): “Reshaping economic geography”. WB report.
Who am I?
Carlos Llano
 Associate professor. Economics and Business School.
Universidad Autónoma de Madrid (UAM-Spain).
 Coordinator. Master in International Economics at the UAM.
 Fields of interest: international and interregional trade; NEG; regional
and urban economics; spatial economics; macroeconomics.
 Office: E1-306
 Emails: [email protected]
 Web: www.uam.es/carlos.llano/
What is the course about?
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 Goal: to understand the main international trade
models and the relationship between economics and
geography.
 Content:
 Both theoretical and empirical perspectives are covered.
 We examine the relationship between economic activity,
territorial location and trade, in the context of recent
developments in Trade Theory and Economic Geography.
 Approach:
 Advanced-undergraduate level (Feenstra and Taylor, 2010;
Krugman et al, 2012).
 Computer Labs. Stata, etc.
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Methodology and Grading
The course will include three kinds of activities:
 Theoretical classes: Each lesson will cover a topic.
 Advanced-undergraduate level (Feenstra and Taylor, 2010; Krugman et
al, 2012).
 2-3 Computer Labs: where the students will use econometric
and simulation models.
 Project: during the course, the students will develop a brief
project using real data. The specific content of the project will be
described during the course.
Grading:
1.
2.
Project (50%). March 31st. 2017
Exam (50%). March 31st. 2017