|Course Title||International Economics|
|Institution||Varna University of Economics|
The course of International Economics is the basic introductory course of international economic relations, attended by students in the same faculty of the university. It serves as a fundament to the understanding of the rest of special subjects, regarding international business. The course is lectured in two semesters - IV. and V. within 90 hours of lectures and 60 hours of seminars.
Students' assumed basic knowledge for participating in the course include Micro- and Macroeconomic theory, Economic History, Economic Geography, Introduction in Law and Applied Mathematics, studied in the first 3 semesters of education.
II Objectives of the course
The course aims at presenting the main features of international movement of commodities and production factors over the state borders, regarding the national and international efforts of regulating the processes mentioned. The first part of the course deals with the historic matters of contemporary integrated world economy and the purely theoretical approaches in understanding the process of integration. The second part deals mainly with the economic policy of an open economy, stressing on the country's role and benefits of participating in the international economic exchange.
As students of International Economics may choose the options of studying both theoretical economics and business administration, the integrated course of International Economics is designed to serve both of the specializations with a general approach towards the macroeconomic environment of international transactions on a state and on a corporate level. At the end of the course students are supposed to understand the main objective laws, factors and accidental circumstances, that determine the international division of labour.
III. Course Detail
Topic 1. Genesis and development of world economy Subject of International Economics as a separate discipline. Incorporation of foreign factors into conditions of social development. Foreign trade relations until capitalism. State trade within imperial conditions. Functions and organization of foreign trade in the empires. Private trade until capitalism. Development of world trade and world market - the competition between state and private trade. The role of mercantile foreign trade for the emerging of foreign trade. The parallel existence of capitalism on national and international level.
Topic 2. Structure of today's world economy. Emerging of center - periphery structure and peculiarities of the economies of developing countries. The period of early colonization and trade capitalism. Spread out of international division of labor in the 19. century. The period of redistribution of colonies and capital export. Economic dependence after the end of colonialism.
Seminar topic: Preconditions and historical background of Bulgaria's joining the periphery of world economy.
Topic 3. The role of former socialist countries in the world economy. The period of self-isolation from the world economy. Insolvency of the foreign trade model of socialism from the point of view of planning, institutional structure of trade and the administrative isolation of domestic economy from foreign market influences. The problems of market transition and opening of the economy towards the world economy. Speed of reforms in particular countries.
Topic 4. Internal structure of main economic blocs in the world. Highly developed countries with market democracies. Main economic contradictions between USA, EC and Japan. Developing countries in the world economy. Peculiarities in trade activities of developing countries. Trade policy of developed countries towards developing ones. International debt crisis. Experiments of global regulation of international economic processes. International economic organizations.
Seminar topic: Problems before the reintegrating of Bulgarian economy into the world economy. Comparison with other post-communist countries.
Topic 5. Motives for participating in international division of labor. Cases, when international division of labor has no alternatives: uneven distribution of production factors, armament necessities, benefiting from economics of scale, overwhelming temporary disbalances in demand and supply, consumers' requirements for variety.
Topic 6. Classical theory of absolute and comparative advantage. Mercantilism as a consecutive trade policy. Adam Smith's argumentation for reduction of state control over economic process. Ricardo's theory of comparative advantage: conditions for existence, modeling, measuring and benefiting from comparative advantage in the classical trade model.
Seminar topic: Positive and negative consequences of mercantilist policy. Comparative advantage as a principle of personal and corporate behaviour.
Topic 7. Alternative theories on the benefits of world trade. Imperfect competition and transportation costs in international trade. Comparative advantage with competitive prices. Monopoly structures in domestic market. Monopoly pricing. The theory of products' life cycle.
Topic 8. Neoclassical theory of comparative advantage. Specialization and trade with constant alternative cost. Specialization and trade with growing alternative costs. Terms of trade and distribution of benefit from mutual trade. Factors, defining the form of production possibilities curve. Factor prices, factor endowment. Heckscher-Ohlin theorem. Leontieff paradox. Stolper-Samuelson theorem. Rybczynsky theorem.
Seminar topic: Relaxing the strict preconditions of Heckscher-Ohlin theorem.
Topic 9. Dynamic approach of international trade theory. Economic growth, increase in production factors and international factor mobility. Incomes and consumers' taste as determinants of trade. Alternatives of factor endowment. Trading with intermediate products.
Topic 10. Trade policy. Advantages and disadvantages of protectionism and free trade in the short and long run. The system of international treaties, agreements and conventions in coordinating foreign trade policy. Main principles of international trade.
Seminar topic: Arguments in favour and against protectionism.
Topic 11. Tariffs and customs policy. Tariffs and tariff discrimination. Economic consequences from the application of tariffs. Effects upon a small and a big country. Nominal and effective tariff protection. Fiscal and protectionist tariffs. Classification of tariffs upon methods of determination, economic influence and legal basis. Customs tariff and its structure. Other indirect taxes as tariff limitations. Free economic zones and their importance.
Topic 12. Non-tariff regulators in world trade. Contingents and quotas, types and methods of distribution. Licensing, permission and registration of foreign trade operations. Currency limitations. Hygiene, ecological and safety requirements as means of hidden protectionism. Para-tariff protectionism. Other non-tariff limitations. Export promotion policy. Export subsidies - types. Means of protection against subsidized and dumping imports.
Seminar topic: Outline of Bulgarian customs tariff, procedures and legal regulation.
Topic 13. International regulation of foreign trade. GATT foundation - purpose and prerequirements. History of negotiation rounds. Structure and contents of main codexes. World Trade Organization and liberalization of international trade. New codexes within WTO. Bulgaria's relations with WTO.
Seminar topic: First results of Bulgaria's joining the WTO.
Topic 14. Trade policy of Bulgaria's main trading partners. Contents and latest amendments in the basic trade agreements of Republic of Bulgaria with the European Union, CEFTA, the Russian Federation, Turkey, USA, Macedonia, the Baltic countries. Special features of trade policy of countries in the Middle and Far East.
Seminar topic: Mutual reduction of protectionist measures and effect upon commodity exchange between Bulgaria and its main trading partners.
Topic 15. International trade with services. Classification of services subject to international trade. Channels of technology transfer. Direct investments, trading with patents, licenses, and know-how.
Topic 16. International currency system. The system of golden standard. The Bretton-Woods system. Types of exchange rates. Monetary reform in world economy.
Seminar topic: Arguments in favour and against fixed and floating exchange rates.
Topic 17. International capital markets. Simple model of international capital market. Market disturbances in case of floating exchange rates. Determinants of long run exchange rates. Monetary approach in determining the exchange rate. Influence of monetary conditions upon domestic economy.
Topic 18. Balance of payments. Definition of the balance of payments. Accountancy rules. Special drawings. Keeping the balance of payments. Automatic and induced accommodation of the balance of payments. Monetary approach towards the accommodation of the balance of payments. Problems of the balance of payments of Bulgaria.
Seminar topic: Bulgaria's balance of payments and its relation to the rest of macroeconomic indicators of the country.
Topic 19. International capital flows. Main functions of capital markets. Portfolio theory and its implications. Forwarding capital markets. Direct and portfolio investments. Interrelations between commodity and capital export. Main exporters and importers of capital, tendencies. Benefits and risks for the participating countries on macro level.
Topic 20. Scientific and technology cooperation. International cooperation in the field of fundamental research. International product cooperation and specialization. International cooperation in maintaining and securing of production and trading process. Joint ventures and regulation of their activities. Foreign investment in Bulgaria - actual state and perspectives.
Seminar topic: Legal regulation of foreign investment in Bulgaria.
Topic 21. Multinationals. Definition, factors and motives of multinational activities, fields of manifestation. Multinational corporations - nature and purposes. Transfers and transfer pricing. Taxation behavior of multinationals. The problem of state control over the multinationals.
Topic 22. International labor migration. Causes, types, tendencies. Effects upon sending and donor countries. International regulation of migration flows. Foreigners sojourn in Bulgaria.
Mutual relation between commodity trade and international movements of production factors.
Topic 23. International transfer of negative effects /shocks/. G?n?rating of inflation in the world economy - mechanisms. Transfer of business cycles throughout the national economies. Currency crises - mechanism of contagion. Possibilities for overwhelming of financial collapse. International monetary institutions and the countries in crisis - problems of cooperation.
Seminar topic: East Asian and Russian currency crises and their impact over currency board in Bulgaria.
Topic 24. Regional economic integration. Types and stages of development. Economic effect from the customs union. European economic integration. Initial effect from the European economic integration. Monetary union. Principles of the ERM. European currency system. Institutional grounds of the ERM. Other integration communities. The tendencies of regionalism and globalization.
Seminar topic: Main European Institutions and their role in the negotiations with candidates to join the EU.
Topic 25. Macroeconomic policy in an open economy. Monetary and fiscal policy in an open economy. Macroeconomic policy with managed floating of exchange rates. International impacts of national monetary and fiscal policy. IS-LM-BP model of macroeconomic balance.
Seminar topic: Empirical survey on the IS-LM-BP model in Bulgaria.
Students shall pass a consideration intermediary exam at the end of the firs semester and a final exam at the end of the course. A precondition for taking the exams is submission of a semester paper on a voluntary topic, included in the syllabus. The choice of the subject, its content and the list of resources used will be the criteria for assessment. Each seminar will start with a 5 short question test to check the fundamental mastering of matters discussed subsequently. Students presenting two semester papers, that could be developed into a graduation thesis and passing all the tests answering correctly at least 4 of all 5 questions will be dismissed from taking the exams, receiving the excellent mark.