A Graduate Course in International Trade Dazhong CHENG, Fudan University
Schedule for Lectures on International Trade Theory
Department of International Economics
Fudan University
I. Class information:
Instructor: Dr. Dazhong CHENG
Email: chengdz@fudan.edu.cn
Homepage: http://homepage.fudan.edu.cn/~dzcheng
Medium of instruction: Chinese and English
II. Course Description:
As a graduate level course, this course tries to bring together theoretical and empirical studies
scattered over the pages of learned journals and books, and discuss the contemporary literature
and cutting-edge issues in the research of international trade, so as to provide considerable
trainings in both international trade theory and empirical analysis.
It is useless to have some abstract economic theories if these cannot be applied to analyze the real
world problem. So for any topic contained in this course, a theory is followed by its empirical
tests. Bearing it in mind, we divide the topics into six major modules. The first module deals with
the Ricardian model and its empirical tests. The second covers H-O-S model and H-O-V model
and their empirical applications. The third module examines new trade theory and its empirical
tests. The fourth deals with the new-new trade theory and its empirical applications. The fifth
module tackles the trade policy problems. The sixth module focuses on the interaction between
trade and economic growth.
Of course, we still have more topics that are important but we have no time to cover. For example,
the issues concerning trade and environment, trade and WTO, trade and labor market,
international trade in services and intellectual property rights, trade and exchange rate, are both
interesting and important. You are suggested to read the relevant papers and books.
III. Recommended Books and Papers:
The following books and papers are recommended for reading in the course. Students are
expected to make a good effort to read the assigned books and papers ahead of each class (except
for the first session). The papers are provided by the instructor. The books can be found in the
library of Fudan University.
Books:
1. Feenstra, Robert, Advanced International Trade, Princeton University Press, 2004.
2. Borkakoti, J., International Trade: Causes and Consequences, An Empirical and Theoretical Text,
Macmillan Press Ltd., 1998.
Papers:
The required papers are listed in Appendix 1.
IV. Course Assessment and Grading:
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A Graduate Course in International Trade Dazhong CHENG, Fudan University
There will be a number of assignments including group presentation and discussion, and one
final exam for all students.
Active class participation: 10%
Group PPT presentation and discussion: 20%
A short paper or/and final on-site exam: 70%
V. Course Outlines
The course is split roughly as follows: lectures and group PPT presentations & discussions. After
each lecture (except the first two sessions), there will be a group presentation & discussion.
Students are to be grouped to make presentations & discussions. There are 10 groups to present
and 10 groups to discuss.
The in-class presentations & discussions will be based on published papers and unpublished
working papers of this subject. The schedule is as follows:
Course Outlines
Weeks Title
Group to
present
Group to
discuss
1 Lecture: Ricardian Model and Its Empirical Tests
2 Presentation and discussion:
Yue, Changjun and Hua, Ping, 2002, “Does Comparative
Advantage Explains Export Patterns in China?” China Economic
Review, 13, pp.276-296.
A J
3 Lecture: The Neoclassical Models and their Empirical Tests (1)
4 Presentation and discussion:
Bowen, H.P., 1983, “Changes in the International Distribution of
Resources and Their Impact on US Comparative Advantage”,
Review of Economics and Statistics, 65, pp. 402-414.
B I
5 Lecture: The Neoclassical Models and their Empirical Tests (2)
6 Presentation and discussion:
Choi, Yong-Seok, and Pravin Krishna, 2004, “The Factor Content
of Bilateral Trade: An Empirical Test”, Journal of Political
Economy, 112, pp. 887-908.
Rodrik, Dani, 2006, “What’s So Special about China’s Exports?”
NBER Working Paper No. 11947.
C H
7 Lecture: New Trade Theory and the Empirical Tests
8 Presentation and discussion:
Balassa, B. and Bauwens, L., 1987, “Intra-Industry Specialization
in a Multi-Country and Multi-Industry Framework”, Economic
Journal, 97, pp. 923-939.
Lee, Jaimin and Han, Sangyong, 2008, “Intra-Industry Trade and
Tariff Rates of Korea and China”, China Economic Review, 19,
pp.697-703.
D G
9 Presentation and discussion:
McCallum, John, 1995, “National Borders Matter: Canada-U.S.
E F
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A Graduate Course in International Trade Dazhong CHENG, Fudan University
Regional Trade Patterns”, American Economic Review, 85(3), pp.
615-23.
Davis, Donald, R., and Weinstein, David, E., 1997, “Economic
Geography and Regional Production Structure: An Empirical
Investigation”, NBER Working Paper no. 6093.
10 Lecture: Multinationals, FDI, Firm Organization and Trade
11 Presentation and discussion:
Clerides, S., Lach, S. and Tybout, J, 1996, “Is Learning by
Exporting Important? Micro-dynamic Evidence from Columbia,
Mexico and Morocco”, NBER Working Paper 5715.
F A
12 Presentation and discussion:
Kraay, A., 1999, “Exports and Economic Performance: Evidence
from a Panel of Chinese Enterprises”, Revued’Economie du
Developpement, vol. 2, pp. 183–207.
G B
13 Lecture: Trade Policy Analysis
14 Presentation and discussion:
Knetter, Michael M. and Prusa, Thomas J., 2003, “Macroeconomic
Factors and Antidumping Flings: Evidence from Four
Countries”, Journal of International Economics, 61, pp.1–17.
Blonigen, B.A., 2002, “Tariff-jumping antidumping duties”,
Journal of International Economics, 57, pp.31–49.
H C
15 Lecture: Political Economy of Trade Policy
16 Presentation and discussion:
Mitra,Devashish, Dimitrios D. Thomakos, and Mehmet A.
Ulubaşǒglu, 2002, “‘Protection for Sale’ in a Developing Country:
Democracy vs. Dictatorship”, The Review of Economics and
Statistics, Vol. 84, No. 3, pp. 497-508
I D
17 Lecture: Trade and Endogenous Growth
18 Presentation and discussion:
Frankel, Jeffrey A. and David Romer, 1999, “Does Trade Cause
Growth?” The American Economic Review, Vol. 89, No. 3, pp.
379-399.
Baak, SaangJoon, 2008, “The bilateral real exchange rates and
trade between China and the U.S”, China Economic Review, 19,
pp.117-127.
J E
19 Q&A or final exam
VI. Requirements for Preparing PPT Presentation and Discussion
A structured thesis typically covers the following components, which should be reflected in
your PPT presentation and discussion. You can also refer to Appendix 2.
1. A title, reflecting the topic of your research.
2. An abstract, which summarizes your work describing the problem of your thesis, and basic
ideas, probable solutions and possible results.
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A Graduate Course in International Trade Dazhong CHENG, Fudan University
3. Acknowledgements, to those people, who assisted you with your thesis, and it’s
development.
4. Introduction to the problem, defining the problem, researching the ideas and solutions,
difficult parts of the research.
5. Exposition of the problem, full and complete discussion of the problem.
6. A literature review, stating other previous authors or scientist, working on the same problem,
and giving credit to them.
7. Your solution on the problem, describing and explaining your methods of solution and
approaches you tend to implement.
8. Implementation, stating your approach to implement the solution, and analyzing the
reasons why this particular method is implemented.
9. Experiments on the results, conducting research and practical experiments on the theory and
methods you tend to implement
10. Discussion point, analyzing the results of your work, and showing how they prove your
point of the thesis.
11. Conclusions, discussing the results of your research, and summarizing the knowledge,
learnt from this specific thesis research and experiments.
12. References, citing previous writers, and listing sources, that were used in the research, and
whom you referred to in your thesis, e.g. books, articles, journals, websites, etc.
13. Appendices, original material containing of specific supporting pictures and diagrams which
were not included in your thesis body.
Appendix 1: Papers and books required for reading in the course
Week 1 ……Lecture: Ricardian Model and Its Empirical Tests
9 Feenstra (2004), Ch.1, 3.
9 Borkakoti (1998), Ch. 6-7.
Week 2 ……Readings
9 Dornbusch, R., Fischer, S., and Samuelson, P.A., 1977, “Comparative Advantage, Trade, and
Payments in a Ricardian Model with a Continuum of Goods”, The American Economic Review, Vol.
67, No.5, pp.823-839.
9 McGilvray, J. and Simpson, D., 1973, “The Commodity Structure of Anglo-Irish Trade”, Review of
Economics and Statistics, 55, pp. 451-458.
9 Stern, R.M., 1962, “British and American Productivity and Comparative Costs in International
Trade”, Oxford Economic Papers, 14, pp. 275-296.
9 Yue, Changjun and Hua, Ping, 2002, “Does comparative advantage explains export patterns in
China?” China Economic Review, 13, pp.276-296.
Week 3 ……Lecture: The Neoclassical Models and their Empirical Tests (1)
9 Feenstra (2004), Ch.1-2.
9 Borkakoti (1998), Ch. 8, 9, 10, 11, 12, 14, 15, 16.
Week 4 ……Readings
9 Balassa, B, 1979, “The Changing Pattern of Comparative Advantage in Manufactured Goods”,
4
A Graduate Course in International Trade Dazhong CHENG, Fudan University
Review of Economics and Statistics, 61, pp. 259-266.
9 Baldwin , R.E., 1979, “Determinants of Trade and Foreign Investment: Further Evidence”, Review
of Economics and Statistics, 61, pp. 40-45.
9 Baldwin, R.E., 1971, “Determinants of the Commodity Structure of US Trade”, American
Economic Review, 61, pp.126-146.
9 Bowen, H.P., 1983, “Changes in the International Distribution of Resources and Their Impact on
US Comparative Advantage”, Review of Economics and Statistics, 65, pp. 402-414.
9 Minhas, B. S., 1962, “The Homohypallagic Production Function, Factor-Intensity Reversals, and
the Heckscher-Ohlin Theorem”, Journal of Political Economy, 70, pp. 138-156.
9 Stern R.M., 1976, “Some Evidence on the Factor Content of West Germany’s Foreign Trade”,
Journal of Political Economy, 84, pp. 131-141.
Week 5 ……Lecture: The Neoclassical Models and their Empirical Tests (2)
9 Feenstra (2004), Ch.2.
9 Borkakoti (1998), Ch.13.
Week 6 ……Readings
9 Bowen, Harry P., Edward E. Leamer, and Loe Sveikauskas, 1987, “Multicountry, Multifactor Tests
of the Factor Abundance Theory”, American Economic Review, 77, pp. 791-809.
9 Choi, Yong-Seok, and Pravin Krishna, 2004, “The Factor Content of Bilateral Trade: An Empirical
Test”, Journal of Political Economy, 112, pp. 887-908.
9 Davis, Donald R., and David E. Weinstein, 2001, “An Account of Global Factor Trade”, American
Economic Review, 91, pp. 1423-1453.
9 Estevadeordal, Antoni, and Alan M. Taylor, 2002, “A Century of Missing Trade?” The American
Economic Review, Vol. 92, No. 1, pp. 383-393.
9 Helpman, Elhanan, 1984, “The Factor Content of Foreign Trade”, The Economic Journal, 94, pp.
84-94.
9 Leamer, E.E., 1980, “Leontief Paradox, Reconsidered”, Journal of Political Economy, Vol. 88, No.
3, pp.495-503.
9 Obstfeld, Maurice, and Kenneth Rogoff, 2000, “The Six Major Puzzles in International
Macroeconomics: Is there a Common Cause?” in Ben Bernanke and Kenneth Rogoff (eds.), NBER
Macroeconomics Annual 2000, Cambridge: MIT Press, 339-390。
9 Rodrik, Dani, What’s So Special about China’s Exports? NBER Working Paper No. 11947, January
2006.
9 Trefler, Daniel, 1993, “International Factor Price Differences: Leontief Was Right!” Journal of
Political Economy, 101, pp. 961-987.
9 Trefler, Daniel, 1995, “The Case of Missing Trade and Other Mysteries”, American Economic
Review, 85, pp. 1029-1046
Week 7 ……Lecture: New Trade Theory and the Empirical Tests
9 Feenstra (2004), Ch.5.
9 Borkakoti (1998), Ch.25, 26.
Week 8 ……Readings
9 Anderson, James E. and van Wincoop, Eric, 2003, “Gravity with Gravitas: A Solution to the Border
Puzzle”, American Economic Review, Vol. 93, No. 1, pp. 170-192.
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A Graduate Course in International Trade Dazhong CHENG, Fudan University
9 Balassa, B. and Bauwens, L., 1987, “Intra-Industry Specialization in a Multi-Country and
Multi-Industry Framework”, Economic Journal, 97, pp. 923-939.
9 Broda, Christian and Weinstein, David E., 2004, “Variety Growth and World Welfare”, American
Economic Review, Vol. 94, No. 2, Papers and Proceedings of the One Hundred Sixteenth Annual
Meeting of the American Economic Association San Diego, CA, January 3-5, , pp. 139-144.
9 Davis, Donald, R., 1998, “The Home Market, Trade, and Industrial Structure”, The American
Economic Review, Vol. 88, No. 5, pp. 1264-1276.
9 Davis, Donald, R., and Weinstein, David, E., 1996, “Does Economic Geography Matter for
International Specialization?” NBER Working Paper no. 5706.
9 Davis, Donald, R., and Weinstein, David, E., 1997, “Economic Geography and Regional
Production Structure: An Empirical Investigation”, NBER Working Paper no. 6093.
9 McCallum, John, 1995, “National Borders Matter: Canada-U.S. Regional Trade Patterns”,
American Economic Review, 85(3), pp. 615-23.
Week 9……Readings
9 Azhar, Abdul K.M., Elliott, Robert J.R., and Liu, Junting, On the measurement of product quality
in intra-industry trade: An empirical test for China, China Economic Review, 19, 2008, pp.336-344.
9 Lee, Jaimin and Han, Sangyong, Intra-Industry Trade and Tariff Rates of Korea and China, China
Economic Review, 19, 2008, pp.697-703.
Week 10 ……Lecture: Multinationals, FDI, Firm Organization and Trade
9 Feenstra (2004), Ch.11.
Week 11……Readings
9 Aitken, B., Harrison, A.E., and Lipsey, R., 1996, “Wages and Foreign Ownership: A Comparative
Study of Mexico, Venezuela, and the United States”, Journal of International Economics, 40,
pp.345–371.
9 Alvarez, R. and López, R.A., 2005, “Exporting and Firm Performance: Evidence from Chilean
Plants”, Canadian Journal of Economics, Vol. 38, pp. 1384–1400.
9 Bernard, A. and Jensen, J. B., 1999, “Exceptional Exporter Performance: Cause, Effect, or Both?”
Journal of International Economics, 47, 1-25.
9 Bernard, A., Jensen, J. B., Redding, S., and Schott, P., 2007, “Firms in International Trade”,
Journal of Economic Perspectives, 21, 3: 105-130.
9 Clerides, S., Lach, S. and Tybout, J, 1996, “Is Learning by Exporting Important? Micro-dynamic
Evidence from Columbia, Mexico and Morocco”, NBER Working Paper 5715.
9 Greenaway, D. and Kneller, R., 2007, “Firm Heterogeneity, Exporting and Foreign Direct
Investment”, Economic Journal, Vol. 117, (February), pp. F134-F161.
9 Hahn, C., 2004, “Exporting and Performance of Plants: Evidence from Korean Manufacturing”,
NBER Working Paper No. 10208.
Week 12……Readings
9 Aw, Bee Yan and Lee, Yi, 2008, “Firm heterogeneity and location choice of Taiwanese
multinationals”, Journal of International Economics, forthcoming.
9 Aw, Bee Yan and, A.R. Hwang, 1995, “Productivity and the Export Market: A Firm-level
Analysis”, Journal of Development Economics, Vol. 47, pp.313-332.
9 Kraay, A., 1999, “Exports and Economic Performance: Evidence from a Panel of Chinese
Enterprises”, Revued’Economie du Developpement, vol. 2, pp. 183–207.
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A Graduate Course in International Trade Dazhong CHENG, Fudan University
Week 13……Lecture: Trade Policy Analysis
9 Feenstra (2004), Ch.7, 8.
9 Borkakoti (1998), Ch.29.
Week 14……Readings
9 Angtkeiwiez, A. and Whalley, J., China’s New Regional Trading Agreements, NBER Working
paper No. 10992, 2005.
9 Berry, Steven, Levinsohn, James, and Pakes, Ariel, 1999, “Voluntary Export Restraints on
Automobiles: Evaluating a Trade Policy”, American Economic Review, Vol. 89, No. 3, pp.
400-430.
9 Blonigen, B.A., 2002, “Tariff-jumping antidumping duties”, Journal of International Economics,
57, pp.31–49.
9 Bown, Chad P., China’s WTO Entry: Antidumping, Safeguards, and Dispute Settlement, NBER
Working Paper No. 13349, August 2007.
9 Brambilla, Irene, Khandelwal, Amit and Schott, Peter, China’s Experience Under the Multifiber
Arrangement (MFA) and the Agreement on Textiles and Clothing (ATC), NBER Working Paper
No. 13346, August 2007, Revised February 2008.
9 Clausing, K., 2001, “Trade Creation and Trade Diversion in the Canada-United States Free Trade
Agreement”, Canadian Journal of Economics, Vol. 34, No. 3, pp.677-696.
9 Dinopoulos, E., and Kreinin, M., 1988, “Effects of the U.S.-Japan Auto VER on European Prices
and U.S. Welfare,” Review of Economics and Statistics, 70, pp.484-491
9 Knetter, Michael M. and Prusa, Thomas J., 2003, “Macroeconomic Factors and Antidumping Flings:
Evidence from Four Countries”, Journal of International Economics, 61, pp.1–17.
Week 15……Lecture: The Political Economy of Trade Policy
9 Feenstra (2004), Ch.9.
Week 16……Readings
9 Branstetter, L. G. and Feenstra, R.C., 2002, “Trade and Foreign Direct Investment in China: A
Political Economy Approach”, Journal of International Economics, 58, pp.335-359.
9 Dutt, P. and Mitra, D., 2002, “Endogenous Trade Policy through Majority Voting”, Journal of
International Economics, 58, pp.107-134.
9 Fernandes, Ana M., 2007, “Trade policy, trade volumes and plant-level productivity in Colombian
manufacturing industries”, Journal of International Economics, 71, pp.52–71
9 Grossman, Gene M. and Helpman, Elhanan, 1994, “Protection for Sale”, American Economic
Review, pp. 833-850.
9 Levy, Philip I., 1997, “A Political-Economic Analysis of Free-Trade Agreements”, The American
Economic Review, Vol. 87, No. 4, pp. 506-519.
9 Mitra,Devashish, Dimitrios D. Thomakos, and Mehmet A. Ulubaşǒglu, 2002, “‘Protection for Sale’
in a Developing Country: Democracy vs. Dictatorship”, The Review of Economics and Statistics,
Vol. 84, No. 3, pp. 497-508
9 Pinelopi Koujianou Goldberg; Giovanni Maggi, 1999, “Protection for Sale: An Empirical
Investigation”, The American Economic Review, Vol. 89, No. 5, pp. 1135-1155.
9 Trefler, Daniel, 1993, “Trade Liberalization and the Theory of Endogenous Protection: An
Econometric Study of U.S. Import Policy”, Journal of Political Economy, Vol.101.No.1,
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A Graduate Course in International Trade Dazhong CHENG, Fudan University
pp.138-160.
Week 17……Lecture: Trade and Endogenous Growth
9 Feenstra (2004), Ch.10.
9 Borkakoti (1998), Ch.27.
Week 18……Readings
9 Baak, SaangJoon, , 2008, “The bilateral real exchange rates and trade between China and the U.S”,
China Economic Review, 19, pp.117-127.
9 Frankel, Jeffrey A. and David Romer, 1999, “Does Trade Cause Growth?” The American Economic
Review, Vol. 89, No. 3, pp. 379-399.
9 Galiania, Sebastian, Pablo Sanguinetti, 2003, “The impact of trade liberalization on wage inequality:
evidence from Argentina”, Journal of Development Economics, 72, pp.497– 513.
9 Greenaway, David, Wyn Morgan, Peter Wright, 2002, “Trade liberalization and growth in
developing countries”, Journal of Development Economics, Vol. 67, pp.229–244.
9 Harrison, A., 1994, “Productivity, Imperfect Competition, and Trade Reform: Theory and
Evidence”, Journal of International Economics, 36: 53-73.
9 Levinsohn, J., 1993, “Testing the Imports-as-Market-Discipline Hypothesis”, Journal of
International Economics, 35: 1-22.
Week 19……Q&A for the final exam.
Appendix 2: A Stylized Format of an Academic Paper