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

Syllabus Course description Competency targeted Pedagogical methods

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

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

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

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

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

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

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

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

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

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

Syllabus (cont.) 11) Multinational Corporations

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

Syllabus (cont.) 13) Migration and labor mobility

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

Syllabus (cont.) 15) Review

Recap of Intro to Economics: Economic center of gravity map https://www.youtube.com/watch?v=3FNNpUWn7hQ

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.

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.

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?

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

Data describing the world Income and production International trade Population and population growth Inequalities of income Poverty Globalization! https://www.youtube.com/watch?v=HvUCCCm99UQ

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

Main issues and current challenges in the world today

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.

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

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.

Inequalities

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

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

Going back 200 years Steam train, around 1870

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

Going back 200 years Montreal around 1950

Going back 200 years Montreal, 2014

Going back 200 years

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

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.

The Growth of International Investment and Finance

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.

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

The Growth of International Investment and Finance Not a smooth process

6 - The Growth of International Migration

The Growth of International Migration

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.

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).

The Growth of International Migration Deportation of African slaves (1500-1850).

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.

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.