INTERNATIONAL ECONOMICS AND TRADE

6 ECTS credits

School of Economics and Business
Dubrovnik International University

This course aims to present a basic understanding of the benefits, dangers and politics of international trade, as well as the monetary—or payment and investment—arrangements that go along with it. Over the past few decades, the world has opened more and more to international trade and this globalization has led to extraordinary growth in many countries. The benefits of globalization will be discussed.
In addition, the course will discuss the problems that can accompany expanded trade, including the displacement of labour, anti-competitive practices and trade disputes.
When international linkages are so strong, a crisis in one country can quickly spread to others, as happened after August 2007. The course also aims to give students a fundamental understanding of these linkages and the increasing dependence of disparate economies upon one another..
The course is presented in three sections:

• International Trade Theory and Policy: This section presents a basic theory of the benefits of trade and explains how the instruments of trade policy can be used to try to distort or redirect these benefits. And because the instruments of trade policy can redirect the benefits of trade, politics raises its ugly head and the section examines how international negotiations take place.
• Exchange Rates and Open-Economy Macroeconomics: This section explains how a country’s balance of payments measures its financial and trading relationships with the rest of the world and how this balance affects the exchange rate of the currency against other currencies. But countries can choose to control their exchange rates and the section presents a model that will explain how this can be done and the consequences of doing so.
• International Macroeconomic Policy: Countries have, periodically, decided to keep their exchange rates constant (or fixed) and this section examines how this is achieved. It also examines the history of exchange rate regimes in the world over the past 40 years. The advent of European Monetary Union is of particular relevance to Croatia and this is examined, as well as the opportunities and potential for crisis presented by financial globalization.

At the end of the course, students are expected to have an informed opinion on each of these topics. Moreover, students should be able to draw upon some of the most basic models in international economics in order to better express and explain those opinions.