ECON 3506 - International Trade III

North Terrace Campus - Semester 1 - 2014

This course deals with the theory and practice of international trade and of trade-related policies. It focuses on analysing the gains from trade, the changing patterns of trade, the income distributional consequences of liberalising foreign trade, the relationship between trade, investment, and economic growth, and the reasons for and consequences of trade policies.

  • General Course Information
    Course Details
    Course Code ECON 3506
    Course International Trade III
    Coordinating Unit Economics
    Term Semester 1
    Level Undergraduate
    Location/s North Terrace Campus
    Units 3
    Contact Up to 3 hours per week
    Incompatible ECON 3021
    Assumed Knowledge ECON 2506
    Assessment Typically two mid-semester exams, assignments & final exam
    Course Staff

    Course Coordinator: Dr Raul Barreto


    Zara Shroff ,  <>
    Sabiha Akhter, <>
    Course Timetable

    The full timetable of all activities for this course can be accessed from Course Planner.

    Tuesday & Thursday, 4-5pm

    Tuesday, 4-5pm, Physics, 103, Kerr Grant Lecture Theatre
    Thursday, 4-5pm, Engineering Nth, N158, Chapman Lecture Theatre
  • Learning Outcomes
    Course Learning Outcomes
    The purpose of this course is to provide students with a thorough grounding in the theory of international trade as well as international trade policy and to demonstrate the relevance of the theory in the analysis of (a) existing patterns of international trade and what determines them, (b) the conduct of trade policy and (c) the economic implications of international trade and trade policy both for individual economies such as Australia and the wider international community.

     On successful completion of this course students will be able to:
    1 Understand, at the level of formal analysis, the major models of international trade and be able to distinguish between them in terms of their assumptions and economic implications
    2 Understand the principle of comparative advantage and its formal expression and interpretation within different theoretical models
    3 Be able to apply partial equilibrium and (where required) general equilibrium models in analysing the economic effects of (a) trade policy instruments such as tariffs, quotas, export subsidies, (b) retaliatory measures such as anti-dumping duties and countervailing duties and (c) the creation of regional trading arrangements such as free trade areas, customs unions and common markets
    4 Be familiar with, and be able to critically analyse the main arguments for protection and conversely be able to critically evaluate the relevance and realism of arguments for free trade, taking into account the costs and benefits of trade policy measures on different sections of the community and the implications for the formulation of trade policy
    5 Be familiar with the major recent developments in the world trading system, and be able to critically analyse key issues raised both by the current round of WTO negotiations and by the spread of regional trading arrangements
    6 Develop communications skills through the presentation of your work, interactions during tutorial sessions, and appropriate use of the discussion
    University Graduate Attributes

    This course will provide students with an opportunity to develop the Graduate Attribute(s) specified below:

    University Graduate Attribute Course Learning Outcome(s)
    Knowledge and understanding of the content and techniques of a chosen discipline at advanced levels that are internationally recognised. 1-6
    The ability to locate, analyse, evaluate and synthesise information from a wide variety of sources in a planned and timely manner. 1-6
    An ability to apply effective, creative and innovative solutions, both independently and cooperatively, to current and future problems. 1-6
    Skills of a high order in interpersonal understanding, teamwork and communication. 1-6
    A proficiency in the appropriate use of contemporary technologies. 1-6
    A commitment to continuous learning and the capacity to maintain intellectual curiosity throughout life. 1-6
    A commitment to the highest standards of professional endeavour and the ability to take a leadership role in the community. 1-6
    An awareness of ethical, social and cultural issues within a global context and their importance in the exercise of professional skills and responsibilities. 1-6
  • Learning Resources
    Required Resources

    International Trade: Theory and Evidence by Markusen, Melvin, Kaempfer and Maskus, Mcgraw Hill, 1995

    *** This textbook is available free of charge and may be downloaded from: ***

    Recommended Resources

    The set of concepts that we study are standard. They are in no way unique to a certain brand of economics nor are they unique to this textbook. These concepts make up the essence of international trade theory. And I believe that if you understand the theory, you can better assess the world around you. We are economists. We are concerned with what choices people make and why they make those choices. We therefore study theory and then relate the theory to reality. The closer the theory is to the observed world, the better is that theory. And if the theory is really good, we can use it to actually predict behaviour. The better we can predict behaviour, the better will ultimately be the consequent policy that we write and thereby live under.

    The information that you need to know is widely available. I have included some optional references below. Please keep in mind that I ultimately don’t care how you learn this material so long as you do.

    Caves, R.E., J.A. Frankel and R.W. Jones, World Trade and Payments: An Introduction, New York: Harper Collins 1996 (7th edition).

    Ethier,W.J., Modern International Economics, New York: W.W. Norton, 1988 (2nd edition).

    Kenen, P.B, The International Economy, Englewood Cliffs: Prentice Hall, 1989 (2nd edition).

    Krugman, P.R. and M. Obsfeld , International Economics: Theory and Policy, New York: Harper Collins 1994 (3rd edition).

    Pomfret, R. International Trade: An Introduction to Theory and Policy, Oxford: Basil Blackwell, 1991.

    Sodersten, B. and G. Reed, International Economics, London: Macmillan, 1994 (3rd edition).

    Robert C. Feenstra and Alan M. Taylor, International Trade, 2007 Worth Publishers.

    Online Learning
    MyUni - 

    Other online Resources:
    International Center for Trade and Sustainable
    The World Bank: 
    Alan Deardorff’s Glossary of International Economics Terms:
  • Learning & Teaching Activities
    Learning & Teaching Modes

    The lectures will closely follow this text. The idea is that the lectures and the text should reinforce each other. You are strongly advised to keep up with the reading. You will find that the lectures are far easier to follow if you have already been exposed to the material via the text.

    The tutorial will be primarily based on problem solving in preparation for your assessment.


    The information below is provided as a guide to assist students in engaging appropriately with the course requirements.

    Lectures: 2 Hours per week
    Tutorials: 1 Hour per week
    Home study expectation: 6 Hours per week

    Learning Activities Summary


    Part I Introduction Chapters
    Wk 1 Technical Concepts - Markusen,, 1 - 4
    Wk 2 Why do countries trade? 5 - 6
    Part II Theoretical Analysis of International Trade
    Wk 3 The Classical Model: Differing Technologies 7
    Wk 4 & 5 The Heckscher - Ohlin Model 8
    Wk 5 & 6  The Specific Factors Model 9
    Mid Semester Examination
    Wk 7 Government Policies as the Determinants of Trade  10
    Wk 8 Imperfect Competition as the Determinant of Trade and the Gains from Trade 11
    Increasing Returns to Scale 12
    Wk 9 Tastes, Per Capita Income, and Technological -
    Change as the Determinants of Trade
    Empirical Studies of Comparative Advantage -
    Part III Trade Policy
    Wk 10 Tariffs 15
    Quotas and Other Non-tariff Barriers 16
    Week 11 Imperfect Competition, Increasing Returns -
    Strategic Trade Policy
    Preferential Trade Areas 18
    Week 12 The Political Economy of Trade Policy 19
    Administered Protection 20


  • Assessment

    The University's policy on Assessment for Coursework Programs is based on the following four principles:

    1. Assessment must encourage and reinforce learning.
    2. Assessment must enable robust and fair judgements about student performance.
    3. Assessment practices must be fair and equitable to students and give them the opportunity to demonstrate what they have learned.
    4. Assessment must maintain academic standards.

    Assessment Summary
    Mid-semester Test 30% 29 April 2014 (in Class)
    Group Assignment 10% 4 April 2014 (COB)
    Tutorial 10%
    Final Exam 50%
    Assessment Related Requirements

    All marks received prior to the final examination are equated into your final grade only if they represent improvement over your final examination grade. For example, should you score 80/100 on the mid-term, 60/100 on your assignment, 100/100 for your tutorial and 70/100 on the final, your final grade would be credit at (0.30*80+0.10*60+0.10*100 +0.50*70=) 75/100. More will be explained about this throughout the semester. Since all marks received prior to the final examination are redeemable, you have nothing to lose and everything to gain by attending tutorials and doing your best on all of the assessments.

    Should you miss either mid-semester examination for whatever reason, your final examination will be worth 30% more per missed mid-semester exam. You need not excuse yourself for your absence, as there will be no make-ups under any circumstances. This same policy applies to the assignment. Whatever you miss simply adds additional weight to the final.

    Assessment Detail

    1. Legible hand-writing and the quality of English expression are considered to be integral parts of the assessment process. Marks cannot be awarded for handwriting that cannot be read.

    2. Assessment marks prior to the final exam may be displayed on the course website through Myuni. Students are encouraged to check their marks and notify the lecturer-in-charge of any discrepancies.

    It is each student's responsibility to read the examination timetable. Misreading the timetable is not accepted as grounds for granting a supplementary exam. University staff are not permitted to provide examination times to students over the telephone or in response to personal enquiries.

    Students may NOT take into the examination a DICTIONARY (English or English-Foreign)
    Students may take a CALCULATOR that is incapable of storing text.


    Assignments are to be submitted via the Professions Undergraduate Hub on Ground Level of Nexus 10.

    Assignments will generally be returned during tutorials/lectures the week following submission.

    Students must not submit work for an assignment that has previously been submitted for this course or any other course without prior approval from the lecturer-in-charge.

    Course Grading

    Grades for your performance in this course will be awarded in accordance with the following scheme:

    M10 (Coursework Mark Scheme)
    Grade Mark Description
    FNS   Fail No Submission
    F 1-49 Fail
    P 50-64 Pass
    C 65-74 Credit
    D 75-84 Distinction
    HD 85-100 High Distinction
    CN   Continuing
    NFE   No Formal Examination
    RP   Result Pending

    Further details of the grades/results can be obtained from Examinations.

    Grade Descriptors are available which provide a general guide to the standard of work that is expected at each grade level. More information at Assessment for Coursework Programs.

    Final results for this course will be made available through Access Adelaide.

  • Student Feedback

    The University places a high priority on approaches to learning and teaching that enhance the student experience. Feedback is sought from students in a variety of ways including on-going engagement with staff, the use of online discussion boards and the use of Student Experience of Learning and Teaching (SELT) surveys as well as GOS surveys and Program reviews.

    SELTs are an important source of information to inform individual teaching practice, decisions about teaching duties, and course and program curriculum design. They enable the University to assess how effectively its learning environments and teaching practices facilitate student engagement and learning outcomes. Under the current SELT Policy ( course SELTs are mandated and must be conducted at the conclusion of each term/semester/trimester for every course offering. Feedback on issues raised through course SELT surveys is made available to enrolled students through various resources (e.g. MyUni). In addition aggregated course SELT data is available.

  • Student Support
  • Policies & Guidelines
  • Fraud Awareness

    Students are reminded that in order to maintain the academic integrity of all programs and courses, the university has a zero-tolerance approach to students offering money or significant value goods or services to any staff member who is involved in their teaching or assessment. Students offering lecturers or tutors or professional staff anything more than a small token of appreciation is totally unacceptable, in any circumstances. Staff members are obliged to report all such incidents to their supervisor/manager, who will refer them for action under the university's student’s disciplinary procedures.

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