International Trade
Course facts
- Payment: Free, no certificate
- Credits: Non Credit
- Learning style: Self-paced, start anytime
- Resources: Exams; Lecture Notes; Problem Sets
- Before you start: 14.01SC Principles of Microeconomics and 14.02 Principles of Macroeconomics are prerequisites for this course.
MIT OpenCourseWare details
- As taught in: Fall 2016
- Department: Economics
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Why nations trade and who gains: Ricardian and Heckscher-Ohlin models, increasing returns, trade policy, migration and offshoring.
Why do nations trade, what do they trade, and who gains or loses as a result? This undergraduate economics course analyzes the causes and consequences of international trade and investment, then examines why countries restrict trade and what their trade policies achieve. It starts with exchange economies, works through the classic trade models, including Ricardian, specific factors and Heckscher-Ohlin models, adds increasing returns, and closes with tariffs, labor migration, multinational firms and offshoring.
What You Will Achieve
- Explain comparative advantage with the Ricardian model
- Analyze who gains and loses from trade with specific factors and Heckscher-Ohlin models
- Assess how increasing returns change the pattern of trade
- Evaluate the effects of tariffs and other trade policy instruments
Program Overview
Foundations of Trade
Exchange, welfare and standard trade models.
- Preferences, demand and exchange economies
- Welfare, inequality and trade imbalances
- Standard trade models and terms of trade
Classic Trade Models
What determines trade and its winners.
- Ricardian trade model and extensions
- Specific factors model
- Heckscher-Ohlin model
- Trade and inequality
Scale, Policy and Factor Mobility
Modern trade and the tools governments use.
- Increasing returns, dumping and external economies
- Tariffs and other policy instruments
- Labor migration and multinational firms
- Offshoring
Course Completion
Job Outlook
Trade economics is used in economic policy, international organizations, trade law and consulting, and global business strategy.
Good for: Students who have taken principles of micro- and macroeconomics and want the theory behind trade debates.
Keep in mind: A fall 2016 course with lecture notes, problem sets from the 2006 version and midterms from 2004 to 2006, none with solutions; the Krugman, Obstfeld and Melitz textbook is not included.
Bottom line: A clear, model-by-model introduction to trade theory, though self-learners must check their own answers.
Frequently Asked Questions
Are solutions provided?
No. The three problem sets and the 2004, 2005 and 2006 midterms are posted without solutions, so answers have to be checked independently.
Which book goes with the lectures?
International Economics: Theory and Policy by Paul Krugman, Maurice Obstfeld and Marc Melitz, 9th edition.
Does it cover offshoring and migration?
Yes. The final sessions cover labor migration, multinational firms and whether old trade rules still apply to offshoring.
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