BUSINESS, GOVERNMENT, AND THE INTERNATIONAL ECONOMY - IB&M 200 Fall 2000

Lecture: 200 - 01 TTh 11:00-12:15 Denny 205 200 - 02 TTh 12:30-13:45 Denny 205 Lecturer: Michael Poulton 2nd Floor Biddle House poultonm@dickinson.edu 245-1058 (office) 249- 5314 (home - anytime up to 10:00pm) Office hours: 9:30 - 11:00 (daily) 2:00 - 4:00 (daily, except Wed) Please note: I will be happy to talk with you anytime during the semester. Suggestions for improving the course or my delivery and/or inquiries on how you might improve your grade are graciously accepted -- excuses for non-attendance; late, messy, coffee-stained or otherwise illegible assignments; and/or grousing and whining about grades are not.

Prerequisites: Economics 111 and 112 , or Econ 100

Course Objectives

1. To provide students with an understanding of the impact of international trade, how it works and its effects on national economies, including: a. Theories of trade - some traditional and some more radical ideas. b. Barriers to trade - who is really helped or hurt - and how governments might respond to the perceived advantages and disadvantages to international trade. c. Trade policies around the world: Are exports everything? Are trade blocs necessary and what forms can they take? Trade policies for developing economies - why so varied? The political economics of grain. d. Balance of payments/ foreign exchange principles and practical implications for business. e. Macro policies for open economies - fixed vs floating rates f. The realities of global factor movements: impacts on demographics; how multinationals impact the workings of domestic economies; the implications of multinational's activities for regional economic development.

2. To help students put the arguments for free trade and protectionism and the overall importance of international trade in perspective.

3. To increase students understanding of the "global" economy and the roles business, government and the consumer play in it.

4. To introduce students to some of the ethical issues of multinational business activity - internal politics of countries, the environment, product safety, and labor conditions.

Texts and readings: International Economics - 11th Edition, Pugel, T. and Lindert, P., Study Guide For Use With International Economics, Odell, Kerry, and International Economics and International Economies - A Reader, King, Philip. All are available in the bookstore. Reading assignments are listed in the course outline. You are also expected to read either the New York Times, Washington Post, Wall Street Journal, or the International Herald Tribune daily and bring one article with you to each class which illustrates a point we have discussed or are about to cover that day or would like explained. For those of you who feel a little panicky about graphs, I would encourage you to visit McGraw-Hill's website for International Economics at www.mhhe.com/economics/pugel/ then click on "Student Resources." FYI - there is one link to a quick review of the graphs in general; and another that that walks you through some of the more important graphs used in the text book. You might want to explore some of the other links as well: play the virtual economy game (fun macro review), take the quizzes, etc.

Attendance: Call me old fashioned, but, unlike some, I do keep attendance sheets. Your presence is required and will be included in your grade if there is a question of, say, B- or a B. Even though we will be using a text, test questions may include things we discuss in class. The smart attend. In addition, I will hand out at the end of each class, notes for that day's lecture. No attendance, no notes.

Cheating: Despite the fact that at this point in your education we really should not have to discuss this issue, see the Dickinson College Student Code of Conduct. If you are caught cheating in an exam, the ramifications are far worse than simply admitting to yourself that you did not study or were in no way prepared to take it. One exam is only part of your grade,. Cheating may cost you the course - or worse. Please, hand in your own work. The purpose of home assignments and/or exams is for you to learn. You may find that studying together or quizzing each other helps, but I expect you to do your own analysis and thinking.

Grade determination: Final 30% Quizzes (3) 30% Negotiations 15% Study guide assignments 20% Attendance 5% The final will be made up of essay type questions on general concepts or issues central to this course. What ever position you take on an issue, it should be well argued. The dates for the 3 quizzes are listed in the course outline. They will come after major segments of the course. The questions will be essay type questions on specific definitions or concepts we have covered.

During the session, we will have several mini-negotiations for which you will have to come prepared and focused as members of a team. These will address some of the policy issues we will cover in the course.

Assignments from the Study Guide are to help you review material covered in class and the text. They are to be handed in at the beginning of the next session, i.e. assignments from Session 2 are due at the beginning of the third session. Assignments are to be typed, spell checked and grammatically correct on 8 ½ X 11 paper with enough margin for my comments and stapled, if necessary. Please use the KISS method on written assignments - there are a lot of you. Two pages maximum.

The nature of this course is participatory. I expect debate and discussion. The issues presented in this course are ones that impact you, your parents, your community and your country everyday. Attendance: see above.

Course Outline:

Aug 31 Intros Procedures/Expectations Course Overview Why international economics?

Sept 05 Basic underpinnings - supply/demand Two markets and opening trade Reading: Chapter 2 carefully! Assignment: Problems: 1. a,b,c,d, and g Discussion questions 2 and 3 Postscript - think about it!

Sept 07 Comparative Advantage Adam Smith Ricardo Modern Theories Community Indifference Curves Supply/Demand Again! Reading: Chapter 3, pages 31- 51 Assignment: Review Key Terms Problems 1 a-d 2 a-b Discussion Topic 1

Sept 12 Winners and Losers From Trade H-O Theory Stolper - Smuelson Factor Endowments Leontieff Paradox Reading: Chapter 3 Pages 52-57 Chapter 4 - do not skip the Summary Page 77 Assignments: Problems 1 a, b, c 4 a and b Discussion topic 2

Sept 14 Growth and Trade Rybczynski Theorem Dutch Disease Immiserizing Growth Product Cycle Hypothesis and Trade Technology and trade Openness to Trade Reading: Chapter 5 - Look carefully at the article on page 94 Assignments: Problem 4 - and b Problem 5 a and b Discussion Topic 1

Sept 19 Quiz 1 (45 minutes)

Sept 21 Alternative Theories of Trade Reading Chapter 6

Sept 26 The Impact of Tariffs Nationally Optimal Tariffs? Reading: Chapter 7 Assignments: Problem 1 a-d Discussion Question 2

Sept 28 Non-Tariff Barriers Quota's VER's Other tricks Reading: Chapter 8 Assignments: Problems 4 and 5 Discussion question 3

Oct 03 For and against Protectionism Mini-negotiation - China MFN Reading: Chapter 9 and hand out

Oct 05 Mr. Lambert / Discussion

Oct 10 Pushing Exports Dumping Subsidies Duties Reading: Chapter 10 Assignments: Problem 2 a-c Discussion Topic 2, but substitute "French" for "US" government.

Oct 12 BREAK Over the break read Trade Blocs - Chapter 11

Oct 17 Trade Policy Issues Trade and the Environment Are the Green's right? WTO and its function. Is it functioning? Some issues - fishing, greenhouse gases, CFC's Mini-negotiation - India and greenhouse gases Reading: Chapter 12 and hand out Assignments: Discussion questions 1 and 2

Oct 19 Trade Policies for Developing and Countries in Transition. ISI Cartels Exports, again. Reading: Chapter 13 Assignments: Problems 4 and 5 Discussion question 2

Oct 24 The Political Economy of Trade and Agriculture My Special Soap Box Quiz 2 - 30 Minutes Reading: Chapter 14

Oct 26 Foreign Exchange How countries pay one another. Balance of payments Current account Reading: Chapter 15 - more than once! Assignments: Problem 2 a-d Discussion question 1

Oct 31 The FX Market Spot Forward Revaluation/devaluation Cross rates - just to make it more complicated Reading: Chapter 16 Assignments: Problems: 3 a-e and 5

Nov 02 FX Risk Management Hedging one's bets Reading: Chapter 17 Assignments: Problems 1 a-c 2 a-c

Nov 07 FX Rates - the long and the short of it Reading: Chapters 18 and 19 Assignment: Chptr 18 -Problem 3 Discussion question 2 Chptr 19 - Problem 1 a-f

Nov 09 Governments and the FX Floating Fixed Intervention and Controls A little history Reading: Chapter 20 Assignment: Problem 4 Discussion question 3

Nov 14 Intro To the Open Economy Quiz 3 Reading: Chapter 21 Pages 465 - mid 476 Assignments: Problems 1 a-c 2 a-d

Nov 16 Intro (continued) Reading: Chapter 21 mid 476 - 488 Assignment: Problem 5 a-e Discussion question 1

Nov 21 Balances with Fixed Rates Reading: Chapter 22 - Pages 491-510 Pages 507-510 Pages 515-521 Summary Assignment: Problem 6 Discussion question 2

Nov 23 THANKGIVING BREAK Balances and Floating Rates Chapter 23 Nov 28 National and Global FX Choices Reading: Chapter 24 Assignment: Problem 1 a-e

Nov 30 Global Factor Movements How free is free? Labor Reading: Chapter 25 Assignment: Problem 1 a-d Discussion question 4

Dec 05 Capital Flows Debt overhang Debt Service Tequila effect and Asia's hangover Mini-negotiation- forgiving national debts Reading: Chapter 26 and handout Assignments: Problem 2 4 Postscript: Do you agree?

Dec 07 FDI and MNC's - Ramifications Q&A/OPEN DISCUSSION About the Final Exam - a couple of practice questions THE FINAL EXAM AS SCHEDULED