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AG ECON 532 INTERNATIONAL TRADE                                                                           (3L+0P) II

Objective
  The aim of the course is to appraise the students with the basic theories of international trade and to show how these may be applied in planning for international trade.

Theory

UNIT I
  The pure theory of international trade; absolute and comparative advantage; international trade equilibrium. Supply side analysis: opportunity cost; trade under increasing opportunity costs; factor endowments; trade and factor prices; factor price equalisation. Demand side analysis: community indifference curves; demand and international trade. Integration of demand and supply; offer analysis; general equilibrium; equilibrium in product and factor markets.

UNIT II
  Application of trade theory; terms of trade; supply and demand shifts; technological change; factor supplies and trade; factor intensities; transport costs; location. Trade with many goods and countries; Leontief paradox; human skills; technological gaps; the product cycle; scale economies.

UNIT III
  Trade policy: Protection; tariff  and non-tariff  measures; trade and market structure; trade liberalisation; factor mobility and movements; role of  multinational enterprises. National competitive advantage – Porter’s diamond.

UNIT IV
  International finance: institutional money and credit markets; foreign exchange markets. Balance of  payments analysis: funds flow; capital and current account. Inter national adjustment mechanisms; fiscal and monetary adjustments. The International Monetary System; Bretton Woods to WTO. Recent developments in the international trade system. Implications for developing countries. Trade Blocks. Measures of  trade competitiveness. Concepts of  trade creation and diversion.

Suggested Readings