Introduction to International Economics MA course programme in Languages for Communication in International Enterprises and Organizations First year, Second Semester (9 CFU) Giovanni Bonifati giovanni.bonifati@unimore.it Office hours: Via Università 4, floor 4, room 37
Introduction to International Economics: overview of the course Three aspects: (1) the context in which the course is placed and its principal aim (2) the more significant economic aspects of the functioning of global economy that the course will address (3) contents, methods and assessment criteria
MA course programme in Languages for Communication in International Enterprises and Organizations Three courses in economics with the general aim to provide professionals who have high linguistic competencies with the essential competencies in economics needed to interact with other professionals who already have specific economic competencies
The aim of the course Introduction to International Economics is to provide competencies in order to: understand the functioning of global economy both from the point of view of countries and firms: two points of view that do not necessarily coincide anymore
Globalization and internationalization of production Globalization Historical process of integration of markets Internationalization of production Fragmentation of the production process and its international re-allocation
The three historical phases of (recent) globalization 1870-1914: North - South Trade 1945-1980: overcoming the interwar protectionist period (1914-1945) 1980 - today: accelerated globalization
Markets integration promotes international trade: Trade/GDP Ratio as an indicator
Who Trades with Whom It is interesting to note that the integration of markets has resulted in a regionalization of trade The next two slides show: - exports for each area by origin and destination in 2012 - the change of the share in world exports for each area over time
In the global economy, countries and firms are related to each other on the grounds of different systems of production Two different types of systems of production: Country-localized systems of production Internationalized systems of production
A country-localized system of production producers formulate business strategies production in vertically integrated plants or in industrial districts external purchases: imported raw materials marketing: national and international sales networks domestic market international markets
A country-localized system of production In this case, results in terms of firms and countries coincide for example a firm s production and employment growth necessarily implies a country s production and employment growth
An internationalized system of production governed by producers big business manufacturing for example: cars, airplanes, computers, semiconductors Research & Development and formulation of global strategies in the original country plants specialized in the production of components in different countries external subcontractors; for example: components and electronic services assembly line, marketing and sales in country 1 assembly line, marketing and sales in country 2 assembly line, marketing and sales in country 3 exports exports exports
An internationalized system of production In this case, results in terms of firms and countries do not coincide for example a firm s production and employment growth does not necessarily imply a country s production and employment growth
Course content General introduction: the three historical phases of globalization since 1870 Topics in International Monetary Economics for example: the balance of payments and the foreign exchange market the determination of output in an open economy the relationship between interest rates, exchange rate, production and employment
Course content Topics in International Trade Theory and International Localization of Production for example: the standard model of a trading economy external economies of scale and the international localization of production firms in the global economy: export decision, outsourcing, offshoring and multinational enterprises
Prerequisites Lectures and tutorials with the aim to provide the necessary foundations in economics Students with no background in economics are strongly encouraged to follow, during the first semester, the course Istituzioni di economia (6 CFU, second year LCE). This course can be included in the curriculum as an eligible course
Methods Different, but complementary, methods: Focusing on significant aspects of economic problems (for example: the effects on income and employment growth of international trade and firms internationalization) Statistical illustrations (for example: time series of macroeconomic variables) Models Country studies and firms case studies
Assessment: from methods to understanding A written exam with open-ended questions Assessment criterion: students are required to use different methods to demonstrate their capacity to understand and manage the topics they have tackled during the course
Course Literature Krugman, P., Obstfeld, M. and Melitz, M., International Economics: Theory & Policy, Pearson Education; Ninth edition 2011 (selected chapters) Essays and other documents will be made available on the dedicated platform (Dolly) on the Department s website