UNIVERSITY OF DELHI
DELHI SCHOOL OF ECONOMICS
DEPARTMENT OF ECONOMICS
Minutes of Meeting Subject: B.A. (Hons.) Programme, Fifth Semester
Course: HE52: International Trade (Discipline Specific Elective, DSE)
Credit: 6
Date: Thursday 9th July 2021 ( revised as on 12th August 2023)
Venue: Zoom Meeting hosted by Department of Economics, Delhi School of Economics,
University of Delhi Meeting ID: 956 1640 7444
Convenor: Dibyendu Maiti
Attended by:
Anu Satyal College of Vocational Studies
Simran Sethi Hansraj College
Pummy Kalindi College
Priyanka Yadav Daulat Ram college
Ravi Kant SRCC
Ujjayini Roy Lakshmibai College
Suman Rani Shyam Lal College (Day)
Vaibhav Puri Sri Guru Gobind Singh College Of Commerce
Srividya Subramaniam SGTB Khalsa College
Astha Ahuja Aryabhatta
Puja Saxena Nigam Hindu
Rashmi Sharma Delhi College of Arts and Commerce
Richika Rana SPM College
Apoorva Gupta Ramjas College
Baishakhi Mondal Indraprastha College for Women
Saumya Verma Lady Shri Ram College for Women
Krishnakumar S Sri Venkateswara College
Alka Budhiraja Miranda House
Saumaly Ghosh [Link]
Renu Sinha Satyawati College (M)
Neha Grover Lady Shri Ram College For Women
Course Objective:
The purpose of this course is to inform the basics of international trade theory and to examine
the effects of international economic policies on domestic and world welfare. This course
develops a systematic exposition of models that try to explain the composition, direction, and
consequences of international trade, and the determinants and effects of trade policy. Although
the course is based on abstract theoretical models, students will also be exposed to real-world
examples and case studies. Course Learning Outcomes The module aims to introduce students to
the main theoretical and empirical concepts in international trade, equip students with a thorough
analytical grasp of trade theory, ranging from Ricardian comparative advantage to modern
theories of intra-industry trade, and familiarise students with the main issues in trade policy and
with the basic features of the international trading regime. At the end of the course, the students
should be able to demonstrate their understanding of the economic concepts of trade theory. In
some models, the student will be required to deal with simple algebraic problems that will help
them to better understand these concepts, use diagrammatic analysis to demonstrate and compare
the economic welfare effects of free trade and protection, demonstrate their understanding of the
usefulness and problems related to topics in international trade, and demonstrate their critical
understanding of trade policies.
( This document is slightly revised as on the 12th of August 2023 incorporating suggestions
from the faculty members teaching the course in the constituent colleges online.)
Unit 1 Introduction: What is international economics about?(3 L)
An overview of world trade. Stylized facts about international trade
FT : Ch 1: Trade in the Global Economy, pp1-25
Unit 2: Neoclassical trade theories: 17L
2.1 Ricardian trade theory (notion of comparative advantage and gains from trade due to
specialisation); KOM: Ch 3 : Labour Productivity and Comparative Advantage: Ricardian
Model, pp 52 -78
2.2 Specific factor model; international movement of factors, standard trade model
KOM Ch 4: Specific Factors and Income Distribution, pp 79-114
KOM Ch 6: Standard Trade Model, pp 151-178
2.3 Heckscher-Ohlin theory; Heckscher-Ohlin theorem; factor price equalisation, Rybcznski and
Stolper-Samuelson theorems, Heckscher- Ohlin-Vanek Model
Gandolfo Ch 4: The Heckscher -Ohlin Model, pp 63-77, 80-82, 90-91(Figure 4.11 can be
avoided)
Gandolfo Ch 5: The Four Core Theorems, pp 103 -108
Unit 3: New trade theories ( 20L)
3.1 Gravity model, external economies of scale, internal economies of scale; the Krugman model
KOM Ch 2: World Trade an Overview, pp 39-41
KOM Ch 7 : External Economies of Scale and the International Location of Production, pp 179-
197
3.2 firm heterogeneity; introduction to the theory of multinational firms and FDI, Offshoring of
Goods and Services
KOM Ch 8: Firms in the Global Economy, pp 198-242
FT Ch 7: Offshoring of Goods and Services, pp 197-232
Unit 4 : Trade Policy (20L)
4.1 Instruments of trade policy; tariffs, quotas, export subsidies, voluntary export restraints. The
economics of trade policy
KOM : Ch 9 : The Instruments of Trade Policy, 243-273
4.2 Political economy of trade policy
KOM Ch 10: The Political Economy of Trade Policy, pp 274-282
FT Ch 10: Export Policies in Resource and High Technology Industries, pp 327-366
4.3 International Agreements: Trade, Labour, and the Environment
FT Ch 11: International Agreements: Trade, Labour and Environment, pp 367-410
Gandolfo Ch 12: The New Protectionism,pp 277-295
Gandolfo Ch 3: Offer curve, pp 43-53
References:
1. Feenstra, R., Taylor, A. (2014). International Trade, 3rd ed. Worth Publishers. (Abbreviation
used: FT)
2. Krugman, P., Obstfeld, M., Melitz, M. (2018). International Economics - Theory and Policy,
11th ed. Pearson Education. (Abbreviation used: KOM)
3. Gandolfo, International Trade Theory and Policy (with contribution from Federico Trionfetti),
Springer (2014),2nd ed.
