Week VII: Other Approaches To Trade: New Trade Theory, Absolute Advantage
*Caves, Frankel and Jones, Chs. 8-9.

*Robert Blecker, 1997. "The New Economic Integration: Structuralist Models of North-South Trade and Investment Liberalization", Structural Change and Economic Dynamics 7 (3): 321-45. (ER)

*Robert C. Feenstra and Gordon Hanson, 2001. "Global Production Sharing and Rising Inequality: A Survey of Trade and Wages". NBER Paper, No. 8372. Download

*Robert Blecker, 2001. "Financial Globalization, Exchange Rates and International Trade" PERI Working Paper. Download

Paul Krugman and A. Venebles, 1995. "Globalization and the Inequality of Nations", Quarterly Journal of Economics, 110. pp. 857-880.

*Ralph E. Gomory and William J. Baumol, 2000. Global Trade and Conflicting National Interests, MIT Press. (LR)

George E. Johnson and Frank P. Stafford, 1995. "The Hicks Hypothesis, Globalization and the Distribution of Real Wages", mimeo. (ER, LR)

George Johnson and Frank Stafford, 1992. "Models of Real Wages and International Competition", mimeo, Department of Economics and University of Michigan. (ER, LR)

Weeks VIII & IX: Multinational Corporations and Threat Effects
*James Crotty, Gerald Epstein and Trish Kelly, "Multinational Corporations in the Neo-Liberal Regime", GPEP, ch. 5.

Gerald Epstein, 2000. "Threat Effects: A Survey". PERI Working Paper. Download

*Dani Rodrik, 1998. "Globalisation and Labour, or: if Globalization is a bowl of Cherries Why are there so many glum faces around the Table?" in Richard E. Baldwin, et al. ed. Market Integration, Regionalism and the Global Economy. Cambridge University Press (ER)

*Minsik Choi, 2001. "Threat Effect of Foreign Direct Investment on Labor Union Wage Premium", PERI Working Paper, No. 27. Download

Matthew Slaughter, 1999. "International Trade and Labor Demand Elasticities". Download

Sanjay Reddy and Arindrajit Dube, 2000. "Liberalization, Income Distribution and Political Economy: The Bargaining Channel and Its Implications". Download

Kate Bronfenbrenner, 1997. "The Effects of Plant Closing or Threat of Plant Closing on the Right of Workers to Organize", mimeo, Cornell University. (LR)

*James Burke and Gerald Epstein, "Threat Effects and the Internationalization of Production", in Work & Well-Being in the Age of Finance", ed. J. Ghosh and C.P.Chandrasekhar. Download

Weeks X & XI: Multinational Corporations and Development: Theories and Controversy
William Greider, 1999. One World Ready or Not. Simon and Schuster (LR)

Theodore Moran, 1998. Foreign Direct Investment and Development, Institute for International Economics. (LR)

*Jayati Ghosh, 2003. "Exporting Jobs or Watching Them Disappear; Relocation, Employment and Accumulation in the World Economy", in Work and Well-Being in the Age of Finance, pp. 99-119. (ER)

*Gordon Hanson, 2001. Should Developing Countries Try to Attract FDI, UNCTAD Paper. Download

*Elissa Braunstein and Gerald Epstein, 2002. "How Much Bargaining Power Do 1.3 Billion Consumers Have? FDI In China". PERI Working Paper.

*Elissa Braunstein, 2000."Engendering Foreign Direct Investment: Family Structure, Labor Markets and International Capital Mobility". World Development.

*James R. Markusen and Keith E. Maskus, 2001. "General Equilibrium Approaches to the Multinational Firm: A Review of Theory and Evidence", NBER Paper, No. 8334. Download

Week XII: Tax Competition, Public Finance and Capital Mobility
Vito Tanzi, "Globalization, Tax Competition and the Future of Tax Systems", IMF Working Paper, December 1996. (ER)

Mihir A. Desai, et al. 2002. Chains of Ownership, Regional Tax Competition and Foreign Direct Investment", NBER Paper. Download

John D. Wilson, 1999. "Theories of Tax Competition". National Tax Journal, June Vol. LII, No. 2. pp. 269-303 (ER)

James Hines, Jr. 1999. "Lessons from Behavioral Responses To International Taxation". June. Vol LII. No. 2. pp. 305-323. (ER).

Roger Gordon and James Hines, Jr. 2002. "International Taxation", NBER Paper. Download

Week XIII: Free Trade Agreements and The WTO
Readings to come
Weeks XIV: Alternatives
Robin Broad, Backlash, passim.

John Cavanagh, et al. Alternatives to Economic Globalization; A Better World Is Possible. San Francisco: Barrett-Kohler Publishers

Elissa Braunstein and Gerald Epstein. An Alternative Multilateral Agreement on Investment. Download

James Heintz, 2002. "Global Labor Standards: Their Impact and Implementation". PERI WP no. 46. Download

Robert Pollin, et. al. 2001. "Global Apparel Production and Sweatshop Labor: Can Raising Retail Prices Finance Living Wages?" Download

WEEKLY UPDATES
Week II

NEW, Feb 4, 2003: The Paper by Epstein, Grabel and Jomo on capital controls is now available. Download

1. Here are some questions for Tuesday's class. Of course, we won't have time to deal with all of these questions in depth. But they give you an idea of some of the issues I believe we should take up.

2. I want to remind you that you can get the Eichengreen and Blecker readings from Chris Evans. PLEASE BE SURE TO DO THE READING BEFORE CLASS.

See you Tuesday!

Thought/Discussion Questions for Week II: Restructuring the International Financial System

1. A big problem in international financial arrangements is "moral hazard": that if creditors or borrowers are bailed out, then these groups will not demonstrate their own self-control, and financial crises will simply continue.

a. What forms do you think this moral hazard problem has taken? Has there been moral hazard for debtors, or only for creditors, or both?

b. Some have argued that the market should simply be allowed to discipline borrows or lenders: there should be no bailouts. What do you think about this?

c. What have been other suggestions for dealing with this problem? What do you think of them?

d. What suggestions would you make the deal with the moral hazard (bail-out) problem?

2. Many observers have suggested that in order to reform the international financial system, the IMF should be abolished. Some of them argue that there should be no replacement for it. Others argue that having an institution that carries out some functions that an institution like the IMF should carry out, are necessary to make the international financial system work well. After all, the IMF was created after the breakdown of the 1920's and 1930's in order to prevent such a catastrophe from happening again. Many argue that the IMF should be replaced by one or more other institutions, e.g. a world central bank, a world financial regulatory institution, etc. Some of them argue that the IMF should be reformed, instead of being abolished.

For all those who believe that one or more international financial management institutions are necessary, one of the many difficult questions that arises is the decision making structure of the institution. Some argue for complete democracy defined by one country one vote. Others argue that since this institution will require financial resources, those countries giving more resources should have more say, but that all countries should have some say. Others argue that since many governments are non-democratic, then there should be non-governmental representatives as well. Some argue this is completely impractical.

a. Do you think some such institution of global macro/financial management is necessary?

b. If so, to do what?

c. How should it be governed?

3. A specific example of the above is the Ann Kruger's Sovereign Debt Restructuring Mechanism (SDRM). This raises many issues, including the ones mentioned above. Assess the usefulness of such a mechanism as the SDRM. If an institution like the one suggested there is implemented, how should it be governed?

4. A broad coalition of activists has suggested the implementation of a Tobin Tax and related securities transactions taxes.

a. How would a Tobin tax work?

b. What are some of the costs of it?

c. Benefits?

d. Limitations?

5. A Tobin tax is a kind of capital control.

a. What other kinds of capital controls, if any, should be implemented?
b. Some have argued that such controls would make it harder for developing countries to attract and retain needed capital?
c. What is the evidence on this; how would you study this question?

6. Some progressive economists have argued that what is needed is more controls on creditor institutions: private banks, hedge funds, etc. rather than on borrowers.

a. What is the evidence that the problem lies to a large extent with the lenders?

b. How could this be accomplished? Can you identify particular policies/schemes that have been suggested?

c. What would be the costs to the debtor countries of such schemes?

7. Some argue that, rather than capital controls, or more control, what is really needed is better prudential regulation. How would you study whether this is correct? How would determine the relative roles of internal regulation vs.

8. Some argue that these international schemes are politically infeasible. The emphasis should be on insulating the country from the international financial markets as much as necessary, and pursue more domestic paths of development. Is this feasible? Is this desirable? How?

Week IV
Discussion Questions on Mainstream Trade Theory and The Growth of Income Inequality

1. The Heckscher-Ohlin (H-O) model of international trade and its related Stolper-Samuelson theorems have become the central mainstream framework for studying the impact of international trade on income distribution.

a. What are the key assumptions underlying the standard H-O model? How realistic are they?

b. What are the central predictions of the HO model?

c. What are the key assumptions underlying the Stolper-Samuelson theorem?

d. What are the key results of the theorem?

e. In what ways are these results relevant to the issue of the impact of trade on income distribution?

f. In what ways, if any, are they relevant to the issue of the impact on foreign direct investment on income distribution?

2. What does the empirical evidence say about the validity of the HO and Stolper-Samuelson Model?

3. What stylized facts would a useful theory of trade, capital mobility and income distribution have to capture to be relevant to today's world?

4. What are the stylized facts about changes in income distribution in the U.S. and other rich industrialized countries in the North in recent years? What is the mainstream explanation for this evolution? Critique the mainstream explanation.

5. What, overall, is the empirical evidence on the determinants of changes in income distribution in the developed world over the last several decades? What new research needs to be undertaken to improve on this research?

Week V
Readings for International Trade Theory and the Impact of Globalization on Wages and Inequality

*Caves, Frankel and Jones, World Trade and Payments, 9th edition, chs. 2-7, plus all relevant appendices.

*Alan V. Deardorff, "Overview of The Stolper Samuelson Theorem", Ch 2. The Stolper-Samuelson Theorem, University of Michigan Press. (ER, LR)

David Howell, "On Skill-Biased Technological Change" (ER, LR)

*Richard B. Freeman, "Are Your Wages Set In Beijing"? Journal Of Economic Perspectives, Vol. 9, Number 3. Summer 1995. pp. 15-32. (ER, LR)

Adrian Wood, 1995. "How Trade Hurt Unskilled Workers", Journal of Economic Perspectives, Vol. 9, No. 3, Summer 1995, pp. 57-80. (ER, LR)

William R. Cline, 1997. Trade and Income Distribution, Institute for International Economics.

David Kucera and William Milberg. 2002. "Trade and the Loss of Manufacturing Jobs in the OECD: New Factor Content Calculations, 1978-1995.

Week VII
Gender, International Trade, Finance and Development
1. I mentioned last week that there is a great deal of research being done on commodity chains. A good website for some of this research is: http://www.ids.ac.uk/ids/global/ You can search this site and see that they have many papers and documents on commodity chain analysis.
Readings for Gender

*Stephanie Seguino and Caren Grown, 2002. "Feminist-Kaleckian Macroeconomic Policy For Developing Countries", mimeo. Download Here

Diane Elson, "Gender Awareness in Modeling Structural Adjustment", World Development, 1995, pp. 1851-1868 (ER)

Nilufer Cagatay, Diane Elson, and Caren Grown, "Introduction", special issue of World Development on "Gender and Macroeconomics", Vol 23, No. 11, pp. 1827-1836. (ER)

*Caren Grown, Diane Elson and Nilufer Cagatay, 2000. "Introduction" special issue of World Development, on "Gender and Trade", Vol. 28, No. 7, pp. 1145-1156. Download

*Ajit Singh and Ann Zammit, 2000. "International Capital Flows: Identifying the Gender Dimension" World Development, vol 28, No. 7, pp. 1249-1268. Download

*Marzia Fontana, "Modeling The Effects Of Trade On Women, At Work And At Home: A Comparative Perspective", International Food Policy Research Institute, TMD Discussion Paper No. 110, March, 2003. (skim) Download

*Braunstein, Elissa, "Engendering Foreign Direct Investment: Family Structure, Labor Markets, and International Capital Mobility." World Development. 2000. (See syllabus under MNC's)

Maria Floro and Gary Dymski, 2000. "Financial Crisis, Gender and Power: An Analytical Framework", World Development. 2000. Download

Helena Hofbauer Balmori, "Gender and Budgets: Overview Report", BRIDGE, IDS, (skim) http://www.ids.ac.uk/bridge/ Download

Shenggen Fan and Neetha Rao, "Public Spending in Developing Countries: Trends, Determination and Impact", International Food Policy Research Institute, EPTD Discussion Paper, No. 99, February, 2003. Download

Nilufer Cagatay, "Trade, Gender and Poverty" , UNDP, October, 2001. (ER)

ILO, 2002. "Women and Men in the Informal Economy: A Statistical Picture", Download

Marilyn Carr and Martha Alter Chen, 2002. "Globalization and the Informal Economy: How Global Trade and Investment Impact on the Working Poor", ILO, employment
sector 2002/1. Download

Women's Edge, 2002. "Framework for a Trade Impact Review" www.womensedge.org

Week XI
NAFTA, FTAA and WTO
1. Here are the Readings for this week. Some of the readings are book length; of course, you are not expected to read a whole book. In this case, I have tried to indicate the parts of the book that are most useful

2. There are two three sets of readings:
1) One set has to do with the WTO
2) One set has to do with NAFTA and FTAA (Free Trade Association of the Americas)
3) There is a third reading on "aid" and development policy by the rich countries.

WTO
Third World Network, "The Multilateral Trading System: A Development Perspective", UNDP, 2001.Executive Summary; Parts II, III and IV. Skim as much of the rest as you can. Download

NAFTA
Economic Policy Institute, 2001. "NAFTA at Seven; Its impact on Workers in All Three Nations", Download

FTAA
Alanza Social Continental, "The FTAA Unveiled: A Citizens' Critique of the November 2002 Draft of the Free Trade Area of the Americas", January 2003. Overview, FTAA Chapter on Agriculture, Investor Rights, skim the rest. Download

Aliiance Sociale Continetale, "Competing Visions for the Hemisphere", January 2002. Download

Rich Country Behavior
Nancy Birdsall and David Roodman, Center for Global Development. "The Commitment to Development Index: A Scorecard of Rich Country Policies". Download

December 31, 2003.