International

economics
KROK University
Spring 2017
Nina Ilarionova
ninai@krok.edu.ua
Outline of the course

Introduction
International trade theory
International trade policy
International movement of productive factors
International monetary theory
Modern trends in development of international
economy
Online Sources

http://www.worldbank.org World Bank

http://www.wto.org/ World Trade Organization

http://www.wti.org World Trade Institute

http://www.intracen.org/ International Trade
Centre

https://piie.com/ Peterson Institute for
International Economics (NW, Washington, DC,
USA)

https://www.cia.gov/library/publications/the-worl
d-factbook/
CIA World Factbook
 Textbooks

Paul R. Krugman, Maurice

Obstfeld. International Economics.
Theory and Policy.

Robert M. Dunn, John H. Mutti.

International Economics, Sixth
Edition. Routledge, London.
2004

Robert J. Carbaugh. International

Economics, 10-th ed. Thomson,
2005

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Ilarionova N.M. International

Economics. Microeconomics
Lesson 1. Introduction to the
international economics
1. International economics in the system of
economic sciences
2. Subject and structure of the international
economics
1. International economics in the
system of economic sciences
Economic science the science about
economy, management, relationships
between people, relationships between
people and the environment that occur in
the process of manufacturing, distribution,
exchange and consumption of goods and
services.
It is a social, empiric science and is based
on the experience
 Economic sciences

Fundamental - research the most

common grounds of the economic
activity.

Applied - deal with the specific

forms of economic activity
Classification economic sciences
objective subjective
fundamental political economics
economy
general economic
applied (functional)
marketing
accounting
management etc.
industry
economy of construction
economy of agriculture
economy of tourism etc.
 The main goal

households utility maximization,

companies profit maximization.

the entire country overall national

welfare.
 Problems of the closed economy

Deficit

Excess supply
 market economy = open economy =
= at least two countries
Today companies and households
maximize their target functions by
means of foreign goods.
 World export
20000

18000

16000

14000

12000

10000
USD, bln
8000

6000

4000

2000

0
1940 1950 1960 1970 1980 1990 2000 2010 2020
Modern characteristics of the
World Economy
Openness of national economies
System of supranational international
organizations
Activity of multi- and transnational
corporations
Developed international trade, movement
of labor, capital, technologies
Independent international finances
 International economics

Fundamental economic science that

develops the theory of the market
economy and connects economics with
the applied economic sciences.
 International economics

as a science is a part of the theory of

the market economy that studies
patterns of the interaction of the
subjects of different countries in the
international exchange of goods and
services, in the movement of the
productive factors and formation of the
international economic policies of the
countries.
 2. Subject and structure of the
international economics

Object of the science is the part

of the objective reality that exist
independently from the science and
is being studied by it.

All economic sciences have the

same object the system of
economic relationships.
 Subject of the science

the part of the object that is being

studied by a specific science
Differences between economic theory
and international economics (1)

International demand and international

supply
Tradable VS Nontradable
goods
Differences between economic theory
and international economics (2)
National sovereignty foreign

economic policy in:

Movement of goods, services, factors,
money
National and foreign
currencies
Differences between economic theory
and international economics (3)

Different macroeconomic
conditions - economic fluctuations
monetary and fiscal policies
 Subject of international
economics as a science

International exchange of
goods, services and financial
claims
 Structure of international
economics as the university course
Theory of IE Applied IE
Pure theory of international
trade
International trade policy
International
International movement economic activity
of the productive factors
(capital, labour, technology)

Monetary theory
of international economics
 Pure theory of international trade

A study of international exchange of

domestically produced goods and
services.
It researches real factors and their
involvement in trade, relations of
international exchange and benefits of
international trade.
It shows how real economy defines national
production and consumption, international
trade, real prices and national welfare.
Theory of international trade
policy
National and international regulation of
international exchange and its
consequences.
 Monetary theory of international
economics
Relationship of national balance of
payment and main monetary
macroeconomic values.
It applies macroeconomic models and
focuses on the interrelationship between
aggregate economic variables such as
GDP, unemployment rates, inflation
rates, trade balances, exchange rates,
interest rates etc.
International microeconomics

A part of international economics that

deals with the interstate movement of
goods, services and productive factors.
International macroeconomics

A part of international economics that

deals with the peculiarities of
interaction of national economies and
world economy, their functioning and
regulation in environment of
globalization of financial markets.
Summary
Fundamental economic science that
develops the theory of the market
economy and connects economics with the
applied economic sciences is

________________________________
Summary
IE studies:
Movement of goods and productive factors
State regulation
Relationship of the national balance of
payments and main monetary
macroeconomic values