Tuesday, August 27, 2002
Global Economics, Globalization and International Trade
William L. Carlson
Department of Economics
Global Semester 2002
St Olaf College
This
course will explore the integration of the world through the lens of economics
with emphasis on the effect of national economic activity and international
trade. The four major Global semester
countries Egypt, India, Hong Kong and China, and South Korea will provide the
basic frame but ideas will be extended to the world. We will examine the overused term Globalization and learn how it
relates to life in various parts of the world.
We will begin by developing a set of economic
concepts that will be useful for examining our present world and its
integration. These economic concepts
will be developed as we analyze specific situations in each country. As we visit each country on the Global
Semester we will examine the economic structure of that country and consider
how it fits into the integrated world economy.
The economic perspective will be informed by the flow of resources. Of particular interest will be flows of
goods through international trade, capital flows through the world financial
markets, information flows through electronic communication, and labor flows through physical movement.
Each
of the major global semester countries has a long and rich history that has
influenced the goals and aspirations of its people and their path for achieving
these goals. We will examine some of
this background to lay a foundation for our study of each country. In addition each country has experienced
major changes of direction in the past 50 to 60 years since World War II. These need to be considered also as we
develop our study. Finally in the last
10 to 15 years the world has changed dramatically through the maturity of
electronic computers and information flow, the development of global management
perspectives, and efforts to bring together resources on a global instead of a
national frame of reference. This
electronic change has affected the Global Semester in many ways. The most dramatic effect is that one is not
isolated from one’s home base while in a global semester country. We will explore the implications of this
change on our view of the world and on the world’s view of us.
The
course will include a number of specific topics that will be developed
primarily through lecture and discussion class sessions. But class sessions may also feature a
visiting lecturer or a site visit to provide local perspective. The following topic sessions will be a major
part of the course.
1. Introduction How
Economists Think! Read Gregory Chap. 1 & 2
Economics is concerned with
decisions about production and allocation of goods and resources. Economists think about choices and the costs
and benefits of these choices.
2. Markets Supply,
Demand, Financial Infrastructure Read Gregory Chap. 3
Markets contain sellers and
buyers who set prices and quantities based upon a complex interaction that
involves their personal tastes and desires –bargaining. Markets are fundamental activities in all
societies and have been shown to be the most effective method for most, but not
all, allocations. Large formal
economies require financial institutions to support complex markets.
3. Consumer Behavior Desired and Obtained Goods
Read Gregory Chap 4
An important part of the
economic process concerns the individual needs, wants, and desires for goods
and services. These develop from the
environment (culture, society, wealth) of the individual. These “goods” can be either private
(individual) or public (used by the entire community).
4. Production Inputs
and Costs (Fixed and Variable
Costs) Read Gregory Chap. 5
The complementary economic part
of the economic process deals with how goods are produced. Choices regarding the types and quantities
of resources used for production are
influenced by the value of the resources and the quantities of goods produced.
5. Market Organization Read Gregory Chap 6 & 7
Economic theory defines three
idealized market organization models, perfect competition, monopoly, and
oligopoly. These provide useful reference
points as we study the behavior of actual markets as they behave in the
world. We will carefully develop the
three models and then consider how they apply in the world we are studying.
6. Labor Markets and Governments Read
Gregory Chap 8 & 10
Here we will consider how
various inputs are used in the production process with a particular emphasis on
labor. We will see how the value of an
input – and its compensation—is determined by its contribution to the outputs
produced. Returns to labor also provide
the consumption demand that helps to determine the value of an output. In addition the role of government in the
production process will be examined.
What should government do and what should government not do??
7. Economic Growth Savings, Investment, growth measures, business cycles Gregory Chap 9 & 11 (pg. 171-180)
Economic growth makes the rich
even richer. Growth also provides the
opportunity for sustainable life, for family, for education, for
lifestyle. Unless we are very, very
lucky future growth requires some present sacrifice to provide future
gain. How do we select the balance and
who decides?
8. Macroeconomic Concepts Read Gregory
Chap 11(pg. 180-193) & 12
Introduction to the components of an economy and how the components
interact. This provides a model for
developing and measuring various economic policies. Discussion of Aggregate Demand and Aggregate Supply.
8A. Economic Policy Read Gregory Chap. 15
Examination of potential
economic policy strategies using Macroeconomic Concepts
9. Economic Development
We will examine the concepts and
practices that have contributed to growth or lack of growth in countries
defined as developing countries. What
changes have taken in standard theory as the result of recent growth examples
in the countries that we will visit?
What is the effect of policies in wealthy nations on less developed
countries? What is the responsibility
of wealthy nations to provide direct aid, favorable trade regulations? What fraction of wealthy nation GDP should
be committed to help developing nations?
10.
International Trade and Comparative Advantage Read
Gregory Chap. 16
Present this important economic theory and provide
examples of how trade provides benefits for both poor and wealthy countries.
11.
International Finance and Exchange Rates Read
Gregory Chap 17
The international financial system has become a key
component in the economic success or failure of many countries. We will develop the theory while considering
examples from the Global countries.
12. Globalization
We will first examine the
historical foundations for this term and concept. This will be followed by examining modern usage of the term and
implications for the world we will live in.
The ideas from Friedman, Lexus
and the Olive Tree, will be a part of this discussion. Using economic analysis we will
consider the issues that we have encountered
in our economic exploration of the world.
What do we know and what is a mystery?
Can we help improve the livelihood of people in the world?
13. Discussion of Education, Health Care, and
Population Control Seminar Format
In each of the major countries
student teams will present their research results for that country followed by discussion
and analysis. These topics are
fundamentally important considerations in any nations economic development
plan. Failure in these areas generally
results in failed economic development.
14. Country Analysis National Economic Development for Egypt, India, China, and
South Korea
We will present a series of classes dealing with the
development background and a specific
analysis of that country’s economic history and present status. In some cases this will include visiting
local lecturers. In other cases I will
provide some lecture background and we will jointly note our observations and
analyze the economic implications. We
will also schedule visits to economic sites – such as factories – while in the
various countries. You might look for
your copy of the extended economic background notes that we used to review the
countries during the last part of the Saturday orientation in April. Those notes provide a starting point for my
discussions.
Grading
1. Global Scholar Papers and presentations -- Teams of Two Students 15%
2.
Three to four short Observation and
Analysis papers on a local economic
activity 20%
3. Midterm Exam 25%
4. Final Exam 25%
5. Class Participation and Journals 15%
Essentials
of Economics 5th Edition,
Paul R. Gregory, Addison Wesley Available from the bookstore.
The Lexus and the Olive Tree, Thomas L. Friedman, Anchor Books (paper
back)
This
book provides an overview of the modern world and the close interaction of
peoples in various places. Excellent
foundation to guide our thinking about the world that we will explore.
Mary Barton, Elizabeth Gaskell, Penquin Classics,
(paper back)
This
novel provides a nice description of the situation of workers during the
Industrial Revolution – middle of the 19th century, Manchester
England. A classic novel that helps us
understand the plight of people during the early stages of economic
growth. This will provide an excellent
contrast to the experiences we will encounter during the Global Semester.
1. Economic Notes and papers (40 to 50 pages) prepared by Carlson
Observation
and Analysis Papers
Each student – individual
project-- will prepare a one page analysis of an economic related situation or
observation in each of the four major countries. The analysis paper will begin with a short description of the
situation. This will be followed by an
economic analysis of the behavior of the situation and people involved. You are to use appropriate economic language
and analysis procedures. The paper will
be graded on the quality of your analysis and not on the image of the issue or
description of the situation. Your
topic can be based upon a situation observed in the street or the market, a
newspaper article in a local paper, a conversation with someone in the country,
or some other source. I would be happy
to talk with you about possible topics as we are discovering each country. These papers will be due during the last
week of our stay in each country. There
should be some variety in your topics from one country to the next. For example four papers dealing with
bargaining in the market in four separate countries would not be
appropriate.
Student Scholar Project Global 2002
As
part of the Global Semester each student will conduct research to become a
scholar with respect to an important topic related to economic
development. This research will be
included as part of the Economics course.
Projects will be prepared by teams of two students using the topics
listed below. Each team will prepare a
four to six page paper as a research document that will be part of our
knowledge base. These papers will be due when we board the plane to start the
Global Semester 2002. Papers should be
concise, contain important data, and demonstrate careful analysis of the topic
in the discussion. In addition the
student teams will be resources when their topic is a focus of our study. These topics are essential components of
appropriate economic development.
Economic
development requires a number of well managed and coordinated activities. Among the most important are projects
related to the developed of “Human Capital”.
At the foundation of human capital development are well developed health
care and education programs. Certainly
it is clear that the developed nations with the highest wealth including
European Union States, Japan, United States, Canada, and the fast growing Asian
countries; Singapore, Hong Kong, Taiwan, and South Korea have well developed
health care and education programs.
Another important component in development is reduced population
growth. Countries whose populations
grow faster than their economic capability find it very difficult to provide
any economic gains for its citizens.
This leads us to define the following research topics
Papers
should begin with a discussion and analysis of the principle topic followed by
specific observations, analysis, and conclusions for your particular
country. My sense is that the papers
will spend about one half on the topic and one half on the application of that
topic to your country. Papers on the
same principle topic are likely to contain some similar information. However, each team should do their own
independent research and analysis. In
that way we will maximize our understanding of these important topics.
I
am planning to use your research – with you presenting—as the principle
resource for these important topics that are clearly linked to economic
development. I do not intend to prepare
separate lecture material and so each team has a responsibility for the group
learning. I would be happy to discuss
projects with you. I have asked a
reference librarian to prepare some recommendations for sources to search for
information required to prepare the project.
Select
a partner and a topic and apply to me for assignment (email is great). I will assign in the order of your
application.