ATENEO DE MANILA UNIVERSITY

LOYOLA SCHOOLS

COURSE SYLLABUS

COURSE NUMBER: EC 122

TITLE: International Trade
PRE-REQUISITES: EC 111
DEPARTMENT: Economics
SCHOOL: Social Sciences
SEMESTER AND SCHOOL YEAR: First Semester SY 2019-2020
NUMBER OF UNITS: 3
FACULTY: Dr. Marissa Maricosa A.Paderon
SCHEDULE & VENUE: T-TH 11am-12:30 pm, CTC 406 (EC 122 A)
T-TH 12:30-2:00 pm, SOM 204 (EC 122 B)

A. COURSE DESCRIPTION
This course introduces international trade theory and policy. Topics include a
systematic treatment of traditional comparative advantage theory and new trade theory based
on economies of scale. Emphasis is on the importance of foreign exchange market using the
asset approach to exchange rate determination.

B. LEARNING OUTCOMES
Upon completing the course, the student will be able to:
Content Outcomes -
1) Compare and contrast the different international trade theories.
2) Explain the various instruments of trade policy and effects on various sectors in the
economy.
3) Differentiate the various forms of economic integration; its trade creating- and trade-
diverting effects.
4) Compare and contrast the arguments for and against free trade.
5) Examine the measurement of a nation’s balance of payments, operations of foreign
exchange market and exchange rate determination.
6) Assess the Philippine tariff and trade policy specifically on its international economic
relations.
Skills Outcome -
7) Extrapolate trade data from available websites and explain the case of Philippine patterns
of trade.
8) Explain the impact of instruments of trade policy on the different sectors of the economy
through graphical analysis.
9) Construct a trade portfolio by integrating trade data and trade indicators gathered,
processed and interpreted from available websites on the Philippines compared to
country members of a regional trading bloc.
Attitude Outcomes-
10) Internalize the effects of bilateral or regional trading arrangements that the Philippines
entered into through research.

C. COURSE OUTLINE
Week 1: Aug. 14-16
I. INTRODUCTION
1.1. Definition
1.2. Scope and Relevance of International Economics
P. Krugman and M. Obstfeld, Ch. 1

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Weeks 2-3: Aug.20-22/ Aug.27-29
II. INTERNATIONAL TRADE THEORY
2.1. Mercantilism
2.2. The Classical Trade Theory
2.2.1. David Hume’s Price Specie Flow Analysis
2.2.2. Adam Smith’s Theory of Absolute Advantage
2.2.3. David Ricardo’s Theory of Comparative Advantage
AFC, Chs. 2-4
KO, Ch. 2-3
Deardorff, A. (1998). ‘Benefits and Costs of Following Comparative Advantage.’
Research Seminar in International Economics Discussion Paper No. 423, School of
Public Policy, The University of Michigan.
Week 4: Sept.3-5
2.3. The Neo-Classical Trade Theory
2.3.1. The HO Trade Model
AFC, Ch. 6 & 7
KO, Ch. 5-6
Week 5: Sept.10-12
2.3.2. The Theoretical Qualifications to the HO model
(Demand Reversal, Factor Intensity Reversal & Specific Factors Model)
AFC, Ch. 8
KO, Ch. 4
2.3.3. Empirical Tests of the Factor Endowments Approach
(Leontief Paradox & Recent Tests of HO Model)
AFC, Ch. 9
KO, Ch. 4, 7-9
Week 6: Sept. 17-19
2.4. Gains from Trade
2.5. Offer Curves and Terms of Trade
Week 7: Sept. 24-26
III. ALTERNATIVE THEORIES AND EXTENSIONS
3.1. Post-H-O Theories of Trade
(The Imitation Lag Hypothesis, The Product Cycle Theory, Linder Theory,
Kemp and Krugman Models, Intra-Industry Trade)
AFC, Ch. 10
KO, Ch. 10
Week 8: Oct.1-3
3.2. New Trade Theory
(Strategic Trade Model, Endogenous Growth Trade Model, and Gravity Trade
Model)
Deraniyagala,S. and Fine, B. (2001). “New Trade Theory versus Old Trade Policy: A
Continuing Enigma.” Critical Survey, Cambridge Journal of Economics 2001, 25,
809-825.
AFC, Ch. 10
KO, Ch. 7-8
Week 9: Oct. 8-10
1ST EXAM – OCTOBER 8
OCTOBER 10 – Submit & Report Case Study PH Patterns of Trade

3.3. Economic Growth and International Trade

( Rybczynski Theorem, Immiserizing Growth)
AFC, Ch. 11

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 3.4. International Factor Movements
AFC, Ch. 12
KO, Ch. 7
Week 10: Oct. 15-17
IV. TRADE POLICY
4.1. Tariff
AFC, Chs. 13-14
KO, Ch.9
Tecson, G. (1996). “Philippine Manufacturing Industries and the Effects of Trade
Policy Reforms on Structure and Efficiency.” In Medalla, et.al. Catching Up with
Asia’s Tigers. Philippine Trade and Industrial Policies, Vol. II. PIDS: Makati.
Weeks 11-12: Oct.22-25; Oct.29-31
4.2. Effective and nominal protection, DRC/SER and RCA
4.3. Non-tariff barriers
AFC, Chs. 13-14
KO, Ch. 8
Week 13: November 5-7
November 5: Film Showing – The Commanding Heights

4.4. Arguments for protectionism and liberalization

AFC, Ch. 15
KO, Ch. 10-12
Bruton, H. J. 1998. “A Reconsideration of Import Substitution.” Journal of
Economic Literature 36 , June pp. 903-936.
Week 14: November 12-14
4.5. Economic Integration
AFC, Ch. 17
Mendoza, R., Chua, K., Lau, A., and Paderon, M.M. (2015). The Asian Noodle Bowl:
Free Trade and Economic Integration in the Post-Crisis Era. Makati: AIM Rizalino
S. Navarro Policy Center for Competitiveness and Konrad Adenauer Stiftung.
Krueger, A. (1997). “Free trade agreements versus customs unions.” Journal of
Development Economics 54: pp. 169-187.
4.6. Philippine Tariff and Trade Policy
M.M.A. Paderon Lecture Notes
Paderon, Marissa Maricosa (2017). An Economic Evaluation of the ASEAN Free
Trade Agreement (AFTA): The Case of the Philippines, MBC Research Report
Special Issue, Makati: Makati Business Club, January.
Paderon, Marissa Maricosa (2016). Philippines’ Readiness for the Trans-Pacific
Partnership Agreement, MBC Research Report Special Issue, Makati: Makati
Business Club, July.
Paderon, Marissa Maricosa (2015). Examining Philippine Trade Structure and
Barriers to Trade and Investment, MBC Research Report Special Issue, Makati:
Makati Business Club, January.
Mendoza, R., Chua, K., Lau, A., and Paderon, M.M. (2015). The Asian Noodle Bowl:
Free Trade and Economic Integration in the Post-Crisis Era. Makati: AIM Rizalino
S. Navarro Policy Center for Competitiveness and Konrad Adenauer Stiftung.
Paderon, Marissa Maricosa (2013). Trade Liberalization and Trade Performance in Asia:
1974-2008. PIDS Development Research News Vol. XXXI No.2, April-June, pp.1-6.
Paderon, Marissa Maricosa A. (2008). Did trade liberalization improve Philippine
economic growth: 1974-2003? in Lim, Joseph (ed.), Loyola School Review School of
Social Sciences, Vol.VII: 193-219, Ateneo de Manila University. Quezon City.
Leland dela Cruz, and Marissa M. A. Paderon (2005). Agricultural Trade Liberalization
in the Philippines: Policy History and Competing Perspectives. Institute of
Philippine Culture, Ateneo de Manila University.

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 Bautista, G., Leland dela Cruz, and Marissa M. A. Paderon (2004). Trade Liberalization
and Agricultural Policy in the Philippines in Trade Liberalization, Agriculture and
Small Farm Households in the Philippines: Proactive Responses to the Threats and
Opportunities of Globalization, LWR, HPI, CRS, PhilGerFund, PhilDHRRA, IIRR,
ANGOC and AFRIM. pp. 6-13.
Bautista, G., Leland dela Cruz, and Marissa M. A. Paderon (2004). Effects of Trade
Liberalization on Philippine Agriculture: A Literature Review in Trade
Liberalization, Agriculture and Small Farm Households in the Philippines:
Proactive Responses to the Threats and Opportunities of Globalization, LWR, HPI,
CRS, PhilGerFund, PhilDHRRA, IIRR, ANGOC and AFRIM. pp.14-23.
Macam, M.M.P. (2000). “Open Regionalism: The Philippines in APEC,”in Readings in
Economics, Vol. I (revised edition), Ateneo de Manila University: Quezon City.
Villoria, A. and Macam, M.M.P. (2000). “AFTA and the Philippines,” in Readings in
Economics, Vol. I (revised edition), Ateneo de Manila University: Quezon City.
Macam, M.M.P.(1999). “Philippine Tariff Reform Programs: Process and Prospects,”
in Readings in Economics, Vol. II. Ateneo de Manila University: Quezon City.

Week 15: November 19-21

2nd EXAM – NOVEMBER 19
GROUP Report – NOVEMBER 21

Week 16: November 26-28

V. THE BALANCE OF PAYMENTS, FOREIGN EXCHANGE MARKETS, AND
EXCHANGE RATES
5.1. National Income and the Current Account
AFC, Ch. 24
KO, Ch. 13
5.2. Balance of Payments
AFC, Ch. 19
KO, Ch. 13
S, Ch10
Week 17: December 3-5
5.3. The Foreign Exchange Market and Exchange Rates
AFC, Ch. 20
KO, Ch. 14-15
S, Ch.11
5.4. Exchange Rate Determination
S, Ch.12

Week 18: Dec.10 - 12

FINAL EXAM: DECEMBER 10 or 12

D. REQUIRED READINGS
Appleyard, D., Field, A. and Cobb, S. (2017). International Economics, 7th ed. McGraw-Hill
Companies, Inc. New York.
.
Krugman, P., Obstfeld, M. and Melitz, M. (2015). International Economics: Theory and
Policy. 10th ed., Pearson Education South Asia Pte.Ltd.
Salvatore, Dominick (2012). Introduction to International Economics, 3rd ed, John Wiley &
Sons, Inc.
Salvatore, Dominick (2016). International Economics, 12th ed, John Wiley & Sons, Inc.
**Lecture Notes of Dr. Paderon, Volumes I and II

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E. SUGGESTED READINGS
Paderon, Marissa Maricosa (2017). An Economic Evaluation of the ASEAN Free Trade
Agreement (AFTA): The Case of the Philippines, MBC Research Report Special
Issue, Makati: Makati Business Club, January.
Paderon, Marissa Maricosa (2016). Philippines’ Readiness for the Trans-Pacific
Partnership Agreement, MBC Research Report Special Issue, Makati: Makati
Business Club, July.
Paderon, Marissa Maricosa (2015). Examining Philippine Trade Structure and Barriers
to Trade and Investment, MBC Research Report Special Issue, Makati: Makati
Business Club, January.
Mendoza, R., Chua, K., Lau, A., and Paderon, M.M. (2015). The Asian Noodle Bowl: Free
Trade and Economic Integration in the Post-Crisis Era. Makati: AIM Rizalino S.
Navarro Policy Center for Competitiveness and Konrad Adenauer Stiftung.
Paderon, Marissa Maricosa (2013). Trade Liberalization and Trade Performance in Asia: 1974-
2008. PIDS Development Research News Vol. XXXI No.2, April-June, pp.1-6.
Paderon, Marissa Maricosa A. (2008). Did trade liberalization improve Philippine economic
growth: 1974-2003? in Lim, Joseph (ed.), Loyola School Review School of Social
Sciences, Vol.VII: 193-219, Ateneo de Manila University. Quezon City.
Leland dela Cruz, and Marissa M. A. Paderon (2005). Agricultural Trade Liberalization in
the Philippines: Policy History and Competing Perspectives. Institute of Philippine
Culture, Ateneo de Manila University.
Bautista, G., Leland dela Cruz, and Marissa M. A. Paderon (2004). Trade Liberalization and
Agricultural Policy in the Philippines in Trade Liberalization, Agriculture and Small
Farm Households in the Philippines: Proactive Responses to the Threats and
Opportunities of Globalization, LWR, HPI, CRS, PhilGerFund, PhilDHRRA, IIRR,
ANGOC and AFRIM. pp. 6-13.
Bautista, G., Leland dela Cruz, and Marissa M. A. Paderon (2004). Effects of Trade
Liberalization on Philippine Agriculture: A Literature Review in Trade
Liberalization, Agriculture and Small Farm Households in the Philippines:
Proactive Responses to the Threats and Opportunities of Globalization, LWR, HPI,
CRS, PhilGerFund, PhilDHRRA, IIRR, ANGOC and AFRIM. pp.14-23.
Bruton, H. J. (1998). “A Reconsideration of Import Substitution.” Journal of Economic
Literature 36 June pp. 903-936.
Deardorff, A. (1998). ‘Benefits and Costs of Following Comparative Advantage.’ Research
Seminar in International Economics Discussion Paper No. 423, School of Public
Policy, The University of Michigan.
Deraniyagala, S. and Fine, B. (2001). “New Trade Theory versus Old Trade Policy: A
Continuing Enigma.” Critical Survey, Cambridge Journal of Economics 2001, 25,
809-825.
Krueger, A. (1997). “Free trade agreements versus customs unions.” Journal of
Development Economics 54: pp. 169-187.
Lanzona, L. (2000). An Analysis of Globalization and Wage Inequality in the Philippines:
An Application of the Stolpher-Samuelson Theory. PASCN Discussion Paper No.
2000-03.
Macam, M.M.P.(1999). “Philippine Tariff Reform Programs: Process and Prospects,” in
Readings in Economics, Vol. II. Ateneo de Manila University: Quezon City.
Macam, M.M.P. (2000). “Open Regionalism: The Philippines in APEC,”in Readings in
Economics, Vol. I (revised edition), Ateneo de Manila University: Quezon City.
Pugel, Thomas. (2012). International Economics, 5th ed. The McGraw-Hill Companies, Inc.
Salvatore, Dominick (2004). International Economics. 8th ed. Prentice Hall International,
Inc.
Villoria, A. and Macam, M.M.P. (2000). “AFTA and the Philippines,” in Readings in
Economics, Vol. I (revised edition), Ateneo de Manila University: Quezon City.

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Useful Websites for Trade and Development Data:
- www.wdi.org
- www.wits.org
- www.wto.org
- www.asean.org
- www.apec.org
- www.unctad.org
- www.intracen.org
- www.nso.org
- www.dti.gov.ph
- www.imf.org

F. ASSESSMENT METHODS

Assessment Weight ELO ELO ELO ELO ELO ELO ELO ELO ELO ELO
Methods (%) 1 2 3 4 5 6 7 8 9 10
1st exam 25 √ √ √ √ √ √
2nd exam 25 √ √ √ √ √ √
Case Study 10
(PH Trade √ √ √ √
Brief)
Group 20
Research √ √ √ √
Paper
Final Exam 20 √ √ √ √ √ √
TOTAL 100%

**Case Study (PH Trade Brief) – This requirement accounts for 10% of the final grade.
The case study deals on the Philippine patterns of trade over a certain period of time that will
be specified by the lecturer. The class will render a short presentation of the case and must
submit a three-page written analysis, single-spaced. The written report shall be submitted on
the day of presentation/class hours.

**Group Research Paper (trade portfolio) - This requirement will account for 20% of the
final grade. The class will be divided into groups with 5 members each who will construct a
trade portfolio focusing on one bilateral or regional trading arrangement (RTA) and analysing
the effects of the RTA on the Philippines. The group will render an oral report and submit a
written report with a maximum length of 10 pages, single-spaced including all power point
slides used in the presentation and softcopy of report and presentation. The report should be
submitted on the day of actual presentation. Each group must give a one-page
summary/outline of the report to the class on the day of presentation. The reports will be
supplemented by formal lectures by the professor when necessary.

Recent Economic Geographies/PH-Trade Relations:

1) Regional Comprehensive Economic Partnership (RCEP) – ASEAN, Australia, China,
India, Japan, Korea New Zealand
2) PH-EU-FTA
3) ASEAN-EU FTA
4) PH-Latin America

G. GRADING SYSTEM
A : 92– 100
B+ : 87 - 91

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 B : 80 - 86
C+ : 74 – 79
C : 68 - 73
D : 60 - 67
F : <60
Note: Students can be exempted from the final examination if the Pre-final Average Grade
is B= (1st exam*25%+2nd exam*25%+case study*10%+group paper*20%)/80%.

H. CLASSROOM POLICIES
1. No make-up exam, case or quiz will be given in case of absences. Absence during an
examination day will mean a zero grade. In case of sickness, the student must submit a
medical certificate to be able to take the make-up exam.
2. Eating and drinking are not allowed during class hours.
3. Late case study and group projects will not be accepted.
4. Turn off cell phone or put in a silent mode during class hours.
5. Using the laptop unrelated to the lesson or activity is not allowed during class hours.
6. Using of all electronic gadgets (cell phones, iPod, etc.) is not allowed during class hours.
Anyone caught using any of those items will be confiscated.

I. CONSULTATION HOURS

Schedule: Friday, 3:00-5:00 p.m., Dept. of Economics/European Studies Program

Email: mpaderon@ateneo.edu

/EC 122 Syllabus_Paderon

/29 July 2019