Instructor:

MS 343 Ms. Umme Rabab Syed, Lecturer

School of Management Sciences,

Issues in Global
GIK Institute of Engineering Sciences and Technology
Economy
 Name: Ms. UmmeRabab Syed
Email: umme.rabab@giki.edu.pk(Add “MS343” to the
subject)

Office: G02 –School of Management Sciences, Brabers

Instructor, Class building.

timings, Office Office hours: Monday: 9a.m -10a.m,

hour Tuesday: 8a.m-10 a.m

Wednesday: 8a.m-9 a.m

Thursday: 8 a.m-10 a.m
Class Hours (all lectures in DMgS)
 The student will be familiarized with
▪ Introduction to Globalization
▪ Trade theories
▪ Instruments of trade policy
▪ Development of World Trading System
▪ Regional Economic Integration

General Course ▪ Foreign Exchange Market

▪ International Monetary System
Description ▪ Balance of payment account
▪ Money & banking system
▪ Environment & Economic trade offs
▪ Issues related to Pakistan Economy(Case Studies)
▪ Current Global Issues
 ▪ International Business, Competing in the global market
place by Charles W.L Hill, University of Washington
Text Books (2011)

Reference Books
and Material ▪ Principles of Macroeconomics by Case, Karl E_Fair,Ray
C_ Oster, Sharon E(2017)
 • Assignments 10%
• Quizzes 10%

Tentative Course • Essay 5 %

• Class participation 5%
Grading • Mid Term Examination 30%
• Final Examination 40%
 ▪ A number of assignments and quizzes will be taken
▪ Announced and/or unannounced quizzes may be given
to students any time during/after the lecture
Assignments ▪ Assignment session from the assignment can be taken
anytime after the assignment submission
and Quizzes
▪ Copying/cheating in assignments is categorically
prohibited and assignment will be marked on the basis
of assignment session.
 ▪ According to institute policy, 80% attendance is
MANDATORY to appear in the final examination.
▪ Please be informed if you missed 10 classes you will be
not allowed in final exams

▪ There will be no retake of quizzes.

General Rules ▪ It is expected that you will always come to class well
prepared having read the assigned material for the
class.
▪ For any queries, please follow the office hours in order
to avoid any inconvenience
Introduction to
Trade theories
 Mercantilism

The first theory of international trade, mercantilism, emerged in England in the mid sixteenth century. The principle assertion of
mercantilism was that gold and silver were the mainstays of national wealth and essential to vigorous commerce.

At that time, gold and silver were the currency of trade between countries; a country could earn gold and silver by exporting
goods.

Conversely, importing goods from other countries would result in an outflow of gold and silver to those countries.

The main tenet of mercantilism was that it was in a country's best interests to maintain a trade surplus, to export more than it
imported. By doing so, a country would accumulate gold and silver and, consequently, increase its national wealth, prestige, and
power

The flaw with mercantilism was that it viewed trade as a zero-sum game. (A zero sum game is one in which a gain by one
country results in a loss by another.)
 Adam Smith Absolute Advantage Theory

Free trade refers to a situation

Proposed in 1776, Smith's
theory was the first to explain
why unrestricted free trade is
beneficial to a country.
where a government does not
attempt to influence through
quotas or duties what its
citizens can buy from another
country, or what they can
produce and sell to another
country.
Smith argued that the invisible
hand of the market mechanism,
rather than government policy,
should determine what a
country imports and what it
exports
 Absolute Advantage theory

In his 1776 landmark book The Wealth of Nations, Adam Smith attacked the mercantilist
assumption that trade is a zero-sum game.

Smith argued that countries differ in their ability to produce goods efficiently. In his time, the
English, by virtue of their superior manufacturing processes, were the world's most efficient
textile manufacturers. Due to the combination of favorable climate, good soils, and
accumulated expertise, the French had the world's most efficient wine industry

According to Smith, countries should specialize in the production of goods for which they
have an absolute advantage and then trade these for goods produced by other countries
 Absolute
Advantage
theory
 Absolute
Advantage
Theory