1. 383 002 SA International Economics 383 005 SA International Economics in Society
Prof. Marcello SCARONE

2. Syllabus
Course description
Competency targeted
Pedagogical methods

3. Syllabus - Course content
1) The Growth of International Trade, Investment, Finance and Migration

4. Syllabus (cont.) - Course content
2) Tariffs, Quotas, and Other Trade Restrictions

5. Syllabus (cont.) - Course content
3) International Trade Theory: The Principle of Comparative Advantage and Its Critics

6. Syllabus (cont.) - Course content
4) The History of Trade Policy: From Mercantilism to WTO to CETA

7. Syllabus (cont.) Course content 5) The World Trade Organization

8. Syllabus (cont.) Course content 6) Regional trade groups, agreements, unions

9. Syllabus (cont.) - Course content
7) International Finance and Exchange Rates

10. Syllabus (cont.) - Course content
8) The History of the International Monetary System – The International Monetary Fund

11. Syllabus (cont.)
9) Economic Development Theories » Liberal vs. Dependency

12. Syllabus (cont.)
10) The World Bank and regional development banks

13. Syllabus (cont.)
11) Multinational Corporations

14. Syllabus (cont.)
12) Cultural, Social and Political effects of economic globalization

15. Syllabus (cont.)
13) Migration and labor mobility

16. Syllabus (cont.)
14) Crisis, recession and the future of the world economy

17. Syllabus (cont.)
15) Review

18. Recap of Intro to Economics: Economic center of gravity map

19. Recap of Intro to Economics: Why free trade?
The main objective of free trade agreements like NAFTA is to remove trade barriers.
The typical trade barriers are import tariffs, i.e. taxes levied on imported products (e.g. 5%).
Also, in a free trade agreement, governments can no longer provide unfair advantages to their local businesses (subsidies, local consumption quotas).
The founding idea behind free trade is the theory of comparative advantage.

20. Recap of Intro to Economics: The theory of comparative advantage
Theory of comparative advantage = When each nation specializes in the production of that good in which it has a relative advantage, total production of each good increases; thus all countries can realize welfare gains.

21. Recap of International Economics: Issues in international economics
1) Democracy
Democratic deliberation generally occurs in countries’ parliaments. But what about trade deals?
Will the State still be able to enforce its democratically-adopted laws and regulations?
2) Race to the bottom
Will those who adopt higher standards (environment, working conditions) be penalized?
3) Equity
How to deal with local producers who will be affected? Should local cheese producers be compensated for loss in revenues?
4) Culture
Should States still be able to support their own cultural works, e.g. books, French music quotas on public radios?

22. Relative importance of GDP Population Inequalities International Trade
The Economic world
Relative importance of GDP
Population
Inequalities
International Trade

23. Data describing the world
Income and production
International trade
Population and population growth
Inequalities of income
Poverty
Globalization!

24. Relative importance of countries
Usually, figures/values transformed in USD.
As we compare countries, we can use current exchange rates or PPP exchange rates.
Current exchange rates are easy to get, and inform about international trading power.
PPP is harder to estimate, but informs about average welfare conditions.
What is PPP?
Purchasing Power Parity

27. Main issues and current challenges in the world today

28. 1- International trade
4 factors explaining the recent globalization of trade
Information and communication technologies make exchanges easier
Freight prices are going down.
The USD is commonly used as the global currency, and floating currencies create the need for international financial transactions.
Liberalism emerges from the 20th century as the dominant economic system. Based on free markets and specialization of labor, it fosters international trade.

30. 2 - Population Growing population Reduction in growth rate?
Population went from 3 billion in 1960 to 7 billion in 2012
Overall, children per women tend to decrease
Africa is experiencing the fastest pop. growth rate

31. 3- Inequalities
The Gini coefficient applied to income distribution is the usual indicator of inequality.
The Gini coefficient is calculated as A/(A+B)
It is higher for large inequalities.
It is lower for more equal distributions.
It’s max value is 100% (or 1)
It’s minimum value is 0.

32. Inequalities

33. Inequalities Worldwide, the Gini coefficient is estimated at 70.
What does a Gini coefficient of 70 mean?

34. 4 – Rapid Development Going back 200 years
Montreal’s downtown market, 1829

35. Going back 200 years
Steam train, around 1870

36. Going back 200 years
Montreal, Jacques-Cartier square, around 1929

37. Going back 200 years
Montreal around 1950

38. Going back 200 years
Montreal, 2014

39. Going back 200 years

40. One trend in international trade
International trade and per capita GDP are statistically correlated.

41. 5 - The Growth of International Investment and Finance
International investment = the acquisition of assets located in one country by citizens, firms, or governments of another country.
International finance = international borrowing and lending.

42. The Growth of International Investment and Finance

43. The Growth of International Investment and Finance
Financialisation = the recent tendency of the financial sector, from the 1980s, to grow faster than the real economy.

44. The Growth of International Investment and Finance
International finance is not exclusively a modern phenomenon.

45. The Growth of International Investment and Finance
Not a smooth process

46. 6 - The Growth of International Migration

47. The Growth of International Migration

48. The Growth of International Migration
Two types of international migration:
Humanitarian migration = migration forced by violence or by natural catastrophes.
Economic migration = migration chosen in order to improve one’s economic situation.

49. The Growth of International Migration
One of the greatest mass migrations: from Europe to what are now Canada, the US, Argentina, Brazil and others (1500-now).

50. The Growth of International Migration
Deportation of African slaves ( ).

51. The Growth of International Migration
Major slowdown from the Great Depression (1930s) to after WWII (1945).
Great acceleration by the end of the 20th century.

52. The Growth of International Migration
Economic immigration can be a solution to the demographic deficit most Western countries are facing (ageing population).
High rates of immigration can however cause racial and ethnic tensions.