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7/27/2019 IEP~Session 1
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Amity Business School
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Amity Business School
MBA 2013, 3rd Semester
INTERNATIONAL ECONOMICS AND POLICY
Amanpreet Kang
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How many continents?
How many oceans?
How many countries?
When were nations formed?
How were they organized earlier?
What has happened ever since?
Newest Nation state?
Our World
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What is developed and developing country classification?
Our World
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http://en.wikipedia.org/wiki/File:Ban_Ki-moon_headshot.jpg7/27/2019 IEP~Session 1
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Course Objectives
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The purpose of studying the course:
Visualize & cope with Global Changes in Business scenario
Understanding the role of State
Understanding the role of International Institutions & TradePolicies
Exposure to World Economies, Transformations &Emerging markets
To develop an understanding about International Trade &Globalization
Introduction to International Economic Indicators &Terminologies
Course Objectives
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1. Major developments in World economy/
politico-economic developments
2. Foundations of International Economics
3. Classical Trade Theories Theory of
Absolute Advantage, Theory of RelativeAdvantage and Hecksher Ohlin
4. New Trade Theories IPLC, Competitive
Advantage of Nations
Case Discussions 2 cases
Session Plan
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5. Economic/ Political/ Legal Systems
6. Role of State - Transformation of Europe,Russia, East Europe, China, Africa
7. BarriersTariff & Non Tariff, Dumping,
Antidumping
8. Class Test 1/ Quiz 1 (Objective)
9. Bretton Woods Formation of International
Financial Institutions IMF, World Bank andWTO; Role of IMF and World Bank (IBRD, IDA,
IFC, MIGA, ICSID)
Session Plan
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10. GATT Negotiation Rounds; Tariff
Conversions, Uruguay Rounds
11. Evolution of WTO - Membership, Structure,
Basic Principles (MFN, NT); 12. Agreement
on a) Agriculture b) Trade-in-Services c)TRIMS d) Intellectual Property Rights;
12. Dispute Settlement Mechanism
13. Appeal and Appellate proceduresCase Discussions 2 cases
14. Mid-Semester Test
Session Plan
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15. Regional Economic Integration & Economic
Transformation;
16. Levels of Economic Integration
17. Trade Blocks- EU, EFTA, NAFTA, CARICOM,
ACM, ECSCA, ASEAN, SAARC, SAPTA,Cartels, OPEC
18. Economic, Commercial, Political, Financial,
Marketing, Cultural, Legal & Policy issues & their
management
19. Conflict between Industrialized & Developing
Countries
20. Free Trade, Debt Problem
Session Plan
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25. International Investment FII and FDI; ADB,
EXIM Bank, Forfeiting & Project Exports
Case Discussions 1 case
Session Plan
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30 Sessions
Plan for 30 sessions:
25 Hours of Teaching and case discussions
2 hours Tests (Mid Semester and ClassTests)
3 hours of presentations
Teaching Hours
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Mid Semester Test 1/ 2 Hours (Subjective)
Class Test/ Quiz 1 and 2 1 Hour (Half an Hour each)
Group Activities (including presentation on topic assigned and
project) 3 Hours (20 minutes each)
Project guidelines will be given, topic will be assigned
Presentation guidelines will be given, topic will be
assigned
Cases 6 (to be included in class discussion; case study will
be provided after theoretical discussion)
Internal Evaluation
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(8 marks) Mid Semester Test 1 Hour
(7 marks) Class Test/ Quiz 1 and 2 1 Hour (Half an
Hour each)
(10 marks) Group Activities (including presentation
on topic assigned and project) 3 Hours (20 minuteseach)
Project guidelines will be given, topic will be
assigned
Presentation guidelines will be given, topic willbe assigned
Cases 6 (to be included in class discussion; case
study will be provided after theoretical discussion)
Components Internal Evaluation
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1. International Economics, Francis Cherunilam (4th Edition), McGraw Hill
2. International Economics, BO Sodersten and Geoffrey Reed
(3rd Edition), Macmillan
3. International Economics, Paul Krugman and Maurice Obstfeld(6th Edition), Pearson Education
4. Economics, Samuelson & Nordhaus (18th Edition), Tata McGraw Hill
Text and References
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Must Read:
India Unbound; Elephant Paradigm Gurucharan Das
Capitalism in the Age of Globalisation Samir Amin
(Chapter 1 only)
Must Watch:
Capitalism: A Love Story Michael Moore
Schindler's List
May Read:
Das Kapital Karl Marx
Read and Watch
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Introduction to Economics and
International Economics
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Science
Goal - To improve the living conditions of people in theireveryday lives.
3 fundamental questions:
Whatcommodities are produced and in what quantities?
Howare the goods produced?
For whomare goods produced?
Economies organized through
alternative economic systems (WILL BE DISCUSSED)
Which help in allocation of its scarce resource.
Economics
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Basic Economic Systems
Market economies
Command economies
Mixed economies
Based on:
Ownership of resources
Allocation of resources
What are resources?
Economics
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The different forms of an economic organisation are:
Market economy most economic questions are settled by
market mechanisms.
Individuals and private firms make major decisions
about production and consumption
A system of prices, markets, profits & loss and
incentives & rewards determine what, how and whom
goods are produced. Firms produce goods that yield highest profits (what)
By the techniques of production that are least costly (how)
Consumption determined by individuals decisions about
how to use income generated by labour and land (whom)
Economics
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The different forms of an economic organisation are:
Command economy the government makes all important
decisions about production and distribution.
Government owns most of the means of production
(land and capital)
It owns and directs operations of most enterprises
It employs most workers and directs them what to do
Decides about how the output of society should bedivided among different goods and services.
Government answers major economic questions
through its ownership of resources and power to
enforce decisions.
Economics
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The different forms of an economic organisation are:
Mixed economy has the elements of market and
command.
Economics
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In answering questions related to what and how things should
be produced,
economies are deciding how to allocate resources among
thousands of different possible commodities and services.
Given that the resources are scarce relative to wants,economies must choose:
Among different potential bundles of goods (what)
Select from among different techniques of production (how)
Decide in the end who will consume the goods (whom)
Economies hence should make choices about
INPUTS (Factors of production)
OUTPUTS
Economics
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INPUTS (Factors of production) are commodities or servicesused to produce goods and services.
Land (or natural resources): Land, energy resources, non-energy
resources and environmental resources.
Labour: Human time spent in production Capital: durable goods of a society to produce other goods.
OUTPUTS are useful goods or services that result from the
production process and are consumed or employed for further
production. What outputs to be produced and in what quantities
How to produce them
For whom outputs should be produced and distributed.
Economics
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International economics deals with:
International forces influencing the domestic economic conditions
International forces shaping the economic relationship betweencountries, world economic integration and transition.
the economic interdependence among countries
and includes the effects of such interdependence and the factorswhich affect it.
Economic activities between countries are different from thosewithin the countries because:
Factors of production are less mobile between countries thanwithin the country.
Goods are mobile within and between countries but forgovernment restrictions.
International Economics
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Global economy consists of: A large number of politically independent nations
Nations have
Different types of interdependencies, and
Diverse economic characteristics between and within them Categories of economies: GDP per capital
Low($1,025 or less), Middle(Lowe middle $1,026 to $4,035 andHigher middle $4,036 to $12,475) and High IncomeEconomies
Segmentation into Low, Middle and High IncomeEconomies Basis of segmentation? Position ofcountries? Wealth distribution in the world? Position ofIndia?
First, second and third world countries?
Features of Global Economy
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Developing and Developed Economies
Developing Low and Middle income; all third world
countries; not on basis of income alone as Kuwait and
UAE that have high per capita income are developing
economies; criteria such as sectoral distribution ofincome, employment generation, social development
indicators, etc. are also used; categorized as North
(exceptions Australia, NZ) and South; LDCs, MDCs,
underdeveloped countries, Least Developed Countries
Newly Industrializing Economies developing economies
which have been experiencing rapid industrialization
Asian Tigers
Features of Global Economy
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Transition Economies refers to economies which are in
transition from centralized economic system to the market
economy, also represent a transition from authoritarianism
to democracy.
Features of Global Economy
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Characteristics of Developed Economies
Income, economic development, growth, distribution of
income, standard of living, composition of output,
characteristics of working conditions, overall improvement
in economic welfare. UNCTAD: Human Development Report (Human
Development Index, Human Poverty Index, Gender
Development Index)
Use of sophisticated technology, innovation and fastdiffusion of ideas and technology, dominance of tertiary
and secondary sector in income and employment
generation, market friendly economic policies, open trade
and investment policies, democratic rights, competition and
consumer choice.
Features of Global Economy
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Characteristics of Developing Economies
Low income, inequality in income distribution
Dimensions of Poverty as highlighted by poor include:
Lack of income and assets to attain basic necessities
food, shelter, clothing, health and education.
Sense of voicelessness and powerlessness in the
institutions of state and society Vulnerability to adverse shocks and inability to cope with
them.
Features of Global Economy
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Region vs. Nations
It WAS common to consider a nation as economic unit.
There are vast differences in economic conditions and other
factors relevant to business, between different regions of a
country particularly if country is vast and culturally diverse.
Features of Global Economy
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Growing Economic Power of Developing Countries
The economic growth rate and the export growth rate of
developing economies is significantly higher than that of the
developed economies and the trend is expected to continue.
Overall good performance of the developing countries has beenmainly because of the impressive performance of a small
number of them.
There are 4 developing countries among the 12 largest
economies of the world.
A number of developing economies have a trade surplus withdeveloped countries.
Growing regional integration???
Features of Global Economy
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The term International Economic Gap refers to the wide
economic disparity between the developed and the developing
nations.
The economic and living conditions have improved a lot in the
last century. However, the distribution of these global gains isunequal.
There is general feeling that the present international
economic order is biased against the developing economies.
Some reasons for persistence and widening of the economic
gap are:
Differences in growth rates
Unequal access
Population explosion,etc.
International Economic Gap
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There has been increasing concentration of income, resources
and wealth among people, corporations and countries.
OECD has
19% of global population
71% global trade in goods and services
60% FDI
Global M&As are concentrating industrial power in mega-
corporations at the risk of eroding competition.
Global commercial bank lends a major share to developingnations.
Within the group of developing countries there are wide
disparities in per capita income levels, growth rates, share of
trade, share of foreign investments, etc.
International Economic Gap
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Inclusive global democracy is needed in which all countries
small as well as large should have a voice in decisions.
NIEO (New International Economic Order)
It refers to a set of demands to ensure that the developingcountries get a fair, equal and considerate deal in the
international economic system.
The demand for NIEO assumes that the current international
economic order is unfair.
International Economic Gap
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Q1) Compare Developed and Developing Countries w.r.t. Definition
Characteristics
Location
Land Use and Natural Resources Level of Technology
Principle economic Activity
Tasks to be completed