Econ 437W: Trade, Multinationals, Offshoring, and Consequences of Globalization

Prof. Andrés Rodríguez-Clare, Kern 617, andres@psu.edu

TR 1-215, 252 Ag Eng

Office Hours: Wednesdays 10 am -12 pm

Globalization entails many dimensions: trade, migration, FDI, offshoring, cross-border licensing of technologies, etc. This course will focus on trade, multinationals and offshoring and explore their implications for the U.S. and developing countries.

The course will use Feenstra and Taylor’s “International Economics” textbook for some basic introductory material (FT), Barba-Navaretti and Venables’ “Multinational Firms in the World Economy” (BNV), and Theodore Moran’s “Harnessing Foreign Direct Investment for Development” (THM). We will also use several other newspaper articles and journal articles.

1. Basic facts about globalization, FT chapter 1, BNV chapter 1, World Bank’s brief on Globalization

2. What explains international trade and what are its consequences? A review of basic theory and evidence. Here we will emphasize the implications of trade for income inequality, poverty and prosperity for rich and poor countries. FT chapters 2, 3, 4 and 6. (2 weeks), World Bank’s Brief on Trade and Poverty, World Bank’s Brief on Trade and Inequality, Krugman’s Trade and Wages Reconsidered (also here and here), Lawrence’s Slow Real Wage Growth and US Income Inequality: Is Trade to Blame? and Feenstra’s Globalization and its Impact on Wages

3. Understanding offshoring and its consequences for income distribution and aggregate welfare in rich and poor countries. FT chapter 7. (2 weeks), Feenstra’s Globalization and its Impact on Wages, Baldwin’s Globalization: The Great Unbundling(s), Blinder’s Offshoring: The Next Industrial Revolution?

4. Discussion: Trade and Child Labor and Trade and the Environment

5. Understanding factor movements. Why do they arise, and what are their consequences? Migration and FDI. FT chapter 5. (1 week)

6. What explains the existence of multinationals? Basic theories and case studies. BNV, several chapters. (5 weeks)

7. What are the consequences of multinationals on developing countries? BNV and THM (several chapters). (5 weeks)

Students will form small groups (not more than 3 students in each group) to work on a paper and presentation around a real world case of a company engaging in offshoring or multinational activity. An early presentation in class will emphasize the research questions and methodology. The grade on the presentation and paper will represent 50% of the grade. The other 50% of the grade will be based on class participation and two exams. The exams will take place on October 16 and November 20.

Please see me if you have concerns or comments about the course.  In special circumstances, you may contact the Director of Undergraduate Studies in Economics or provide feedback via a comment box that the Department maintains in 608 Kern.

During the course many possible situations may arise that would result in your inability to attend class, attend exams, or perform at a minimally acceptable level during an examination. Illness or injury, family emergencies, certain University-approved curricular and extra-curricular activities, and religious holidays can be legitimate reasons to miss class or to be excused from a scheduled examination. 

In the case of your own illness or injury, confirmation from a physician, physician’s assistant, a nurse-practitioner, or a nurse is required. Be advised that University Health Services cannot provide such verification unless they have provided treatment and the student authorizes release of information to the instructor. Further, barring extraordinary circumstances, the confirmation must be available to the instructor prior to the missed course event. 

With regard to family emergencies, you must provide verifiable documentation of the emergency. Given the vast array of family emergencies the instructor will provide precise guidance as to what constitutes adequate documentation. Unless the emergency is critical you should notify the instructor in advance of your absence from the scheduled course event. In cases of critical emergencies, you must notify the instructor within one week of your absence.

For University-approved curricular and extra-curricular activities, verifiable documentation is also required. The student should obtain from the unit or department sponsoring the activity a letter (or class absence form) indicating the anticipated absence(s). The letter must be presented to the instructor at least one week prior to the first absence. 

In the case of religious holidays, the student should notify the instructor by the third week of the course of any potential conflicts.

The Pennsylvania State University encourages qualified persons with disabilities to participate in its programs and activities.  If you anticipate needing any type of accommodation in this course or have questions about physical access, please tell the instructor as soon as possible. 

Penn State defines academic integrity as the pursuit of scholarly activity in an open, honest, and responsible manner.  All students should act with personal integrity, respect other students' dignity, rights and property, and help create and maintain an environment in which all can succeed through the fruits of their efforts (Faculty Senate Policy 49-02).  Please see also the Department of Economics integrity statement on the departments website at: http://econ.la.psu.edu/

Dishonesty of any kind will not be tolerated in this course. Dishonesty includes, but is not limited to, cheating, plagiarizing, fabricating information or citations, facilitating acts of academic dishonesty by others, having unauthorized possession of examinations, submitting work of another person or work previously used without informing the instructor, or tampering with the academic work of other students.  Students who are found to be dishonest will receive academic sanctions and will be reported to the University's Judicial Affairs office for possible further disciplinary sanction.