International Economics - 2008/2009

Objectives and assessment

The purpose of this study-unit is to familiarise the student with the fundamentals of international economics and to discuss some of the most important current issues and features. All students are encouraged to participate in the policy discussions during the lectures. The main topics of this year's two semesters are specified in the below list of contents.

There will be a 3-hour examination paper (6 topics to choose 3) at the end of each semester.


Major textbook

Salvatore Dominick (2007), International economics, 9th edition, John Wiley and Sons



Main topics


(1) International trade theory: mercantilism (p32); absolute advantage (p35); comparative advantage (p37); Heckscher-Ohlin theory (p131); factor-price equalisation theorem (p138); product differenciation and intra-industry trade (p179); technological gap (Posner 1961) and product cycle model (p188); static and dynamic gains from trade (p199; 209-210)

(2) International trade policy: effects of tariff measures on trade (p247-256); effective rate of protection (p257-261); non-tariff barriers (NTBs) to trade: quotas, export restraints, export subsidies; technical, administrative and other regulations (p291-302)

(3) Regional economic integration: preferential treatment; effects of free trade areas and customs unions; single market; economic and monetary union (EMU); economic integration issues and problems (chapter 10)

(4) Trade policy and economic development: import substitution; rent seeking and anti-export bias; export orientation, promotion and subsidisation; attraction of export-oriented inward foreign direct investment (FDI); technology transfer; export expansion and diversification (chapters 11 and 12)

(5) Open-economy macroeconomics: balance of payments (p451-454); current and capital accounts (p457); international investment position (p467); economic policy objectives (p644); basic adjustment policies - absorption approach (p625-627); expenditure-changing (fiscal and monetary policies (p644)), expenditure-switching (devaluation/revaluation (p645), Marshall-Lerner condition (p581), J-curve effect (p584) and price reversal effects) and direct controls policies (p646)

(6) The International Monetary System: present and future issues and problems (p780); International Monetary Fund (IMF) operation; IMF conditionality (p783); the main roles of the World Bank, the World Trade Organisation (WTO) (p317-326) and the World Customs Organisation (WCO) in international trade and economic development (chapter 21.6; IMF, World Bank, WTO and WCO websites)

(7) Export sector development cases in line with comparative and competitive advantages (case studies 1-1 and 1-2, p3-4; Together for a Sustainable Future - Pre-Budget Document 2009; www.tradeforum.org case studies on various countries)

(8) Contingency trade protection measures: anti-dumping (case study 9-3, p297; WTO case studies 17 and 38), anti-subsidy (countervailing case study 9-5, p300) and safeguards

(9) Case studies on non-tariff barriers to trade (case study 9-6, p301; WTO case study 24)

(10) Industrialisation in major large developing countries: application of infant-industry argument (p303); case studies on China, India, Pakistan, Turkey, Egypt, Tunisia, Mexico, Brazil etc, relating to energy, steel, shipbuilding, automobile and electronics industries

(11) Islands and small states: characteristics, problems and policy options in Eurozone (case study 20-4, p739; Central Bank 2007:4 Quarterly Review, p47-51; IMF assesses Malta: elimination of subsidies welcomed, Times of Malta 13.8.08; Government aiming for annual growth in tourism, The Commercial Courier, Aug-Sep 2008, p68-71)

(12) The impact of EU trade policy on developing countries: Economic Partnership Agreements (EPAs) and EU trade preferences (GSP+ and free trade areas with diagonal cumulation of origin rules) (www.ids.ac.uk)





Martin Spiteri
Director Excise and Systems
Customs Division

30 September 2008