Mindanao State University

College of Business Administration and Accountancy

DEPARTMENT OF ECONOMICS

ECN 138
INTERNATIONAL BUSINESS AND TRADE
AY 2020 – 2021 First Semester

Course Description: This is an introductory course in international business and trade. The
materials in this course include the core theories of international trade and trade policy. It covers
several subjects such as the different theories in international trade of goods, trade policies,
macro-policies for open economies, foreign exchange market and direct foreign investments and
the multinationals.

Course Objectives:
1. To understand the basic theories about international business and
trade;
2. To know the trade policies and regulations;
3. To understand the foreign exchange market;
4. To understand the macro-policies for open economies; and
5. To better understand the role of foreign direct investments and the
behaviour of multinational firms.
Course Scope and Outline
I. Introduction to International Business and Trade
1. Trade in the Global Economy
II. International Trade Theories
1. Ricardian Theory: Technology differences
2. Heckscher- Ohlin: Factor Proportions
3. Commodity Market Distortions, Imperfect Competition
4. Product Differentiation and Increasing Returns to Scale
5. Out-sourcing and Heterogeneous Firms
II. Trade Policy
1. The Basic Analysis of a Tariff
 2. Quotas and Other Nontariff Barriers
3. Arguments for and Against Protection
4. Pushing Exports
5. Trade Blocs and Trade Blocks

III. Understanding Foreign Exchange

1. Payments among Nations

2. The Foreign Exchange Market
3. What Determines Exchange Rate in the Long run?
4. What Determines Exchange Rate in the Short Run?
5. Government Policies toward the Foreign Exchange Market

IV. Macro Policies for Open Economies

1. How does the Open Macroeconomy Work?

2. External and Internal Balance with Fixed Exchange Rates
3. Floating Exchange Rates and Internal Balance

V. Direct Foreign Investments and the Multinationals

1. What explains DFI?

2. DFI as Tax Evasion
3. Should the Source Country Restrict DFI Outflow?
4. Should the Host Country Restrict DFI?

References:
Dornbusch, R., S. Fischer and R. Startz, 2014. Macroeconomics. New York: McGraw-Hill
International Editions [DFS]
Feenstra, R., and A. Taylor, International Trade 4th Ed., Worth Publishers, 2017. ISBN 13: 978-
319-06890-5. [F &T]
Markusen, J., J. Melvin, W. Kaempfer, and K. Maskus, 1995. International Trade: theory and
evidence. Singapore: McGraw-Hill International Editions [MMKM]
Pugel, T. & Lindert P. International Economics, 10th Ed. 1996. Times Mirror Higher Education
Group, Inc., company. International Student Edition. [P&L]