Indian Institute of Management Kashipur

Post Graduate Programme in Management

Economics of International Business

Term-V Credit: 1

Instructors Name: Atulan Guha

Contact Info: D1-3, Academic Building, [email protected],

Office Hours: Generally, no appointments is required during 1 hour period immediately after
the class.

Prerequisites: Not Applicable

Course Description

As Indian economy is increasingly globalised, business with other is having increasingly greater
impact on Indian business. This business interactions are dominantly taking the routes of trade
and direct investment. India’s industrialisation strategy- ‘Make in India’ has been drawn in this
background. This course is for those who are interested in international business. This course
will also help those who are looking for job profile in consultancy and finance. This shall
equip students with-

1) Trade theories and policy instruments

2) Export-Import Policy Environment
3) Exposer to various procedural issues of Exports and Imports
4) Causes for Foreign Direct Investment
5) Foreign Direct Investment and Trade
6) Changing Dynamics between Investment and International Production: Emergence of
Non-Equity Production
7) Global Policy on FDI: coordination among SDG Goals, greater role of governments in
the economy and the evolution of the investment landscape

Course Objectives
At the end of this course, you will know:

1) How Exports and Imports decisions taken by the firms and nations? [PLO1e, PLO1f,
PLO4a]
2) The trade policy issues with a focus on India by studying -
a. effectivity of various trade policy instruments (tariff, quota) to influence the
trade level and its pattern,
b. relations between trade and development (case for free trade and trade
restrictions),
c. WTO, FTA related issues
[PLO1e, PLO1f, PLO4a, PLO4b]

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 3) Trade procedures and documentation in India. [PLO4b, PLO1e]

4) Why Transnational Companies (TNCs) – Ownership, Location and Internalisation.

Vertical and horizontal Integration [PLO4b]

5) TNCs’ influence on exports [PLO4b]

6) Role of TNCs on changing dynamics of International Production: commodity to

services [PLO4b]

7) TNCs and Non-Equity Production [PLO4b]

8) UNCTAD’s Policy framework for FDI to achieve SDG goals [PLO4b]

Textbooks and Readings

Text Book:
“ International Economics Theory and Policy” by Krugman & Obstfeld, Pearson, latest edition

Recommended Books

1. Ellsworth P. T. and Leith Clark, The International Economy, 5th edition, Page 8-46

2. Other Documents and Articles

1. “Understanding WTO” document from WTO website

2. Sen Sunanda (2005), International Trade Theory and Policy: What is Left of the Free
Trade Paradigm, Development and Change 36 (6):1011-1029

3. Also explore websites of Ministry of Commerce, GOI, WTO and Exim Bank

Pedagogy

The course will be primarily taught though a combination of class discussions, quizzes, term-
long Assignment and presentations.

Class Discussions

The class discussion will involve the readings assigned for the class, which may include book
chapters and articles. You are expected to have done all the assigned reading and to actively
participate in these discussions. Examples from real-economy will be brought in at some places
to enrich the discussion and accentuate comprehension of certain apparently complicated
concepts and issues.

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Quiz

N number of quiz will be given and it may or may not be announced before hand. Each quiz will
cover the material assigned for and/or discussed in that class or previous classes. The missed
quizzes shall not be made up under any circumstances and you will receive zero points. One
lowest quiz score will be dropped.

Assignment:
Each team of students will design a plan to start International Business in any sector of their
Choice
.

 Evaluation Plan
 Quiz [(best (n-1)] [PLO1a,] 30%
Mid-term Examination [PLO1b, PLO1i] 25 %
 End-term Examination [PLO1b, PLO1i] 25 %
 Assignment [PLO1i, PLO1h] 20 %

Session Description Readings

Module 1 : Introduction to International Trade
1&2 Elementary Foundations of Trade or Export- - Text Book, Ch.1
Import - Ellsworth P. T. and Leith Clark,
- Evolution of Trade : Mercantilism The International Economy, 5th
- Why countries do trade or what are the edition, Page 8-46
gains from trade?
- Role of Government in Trade
- Change in Trade Composition

Module 2: Building Comparative Advantages

3-6 Comparative Advantages due to Technology Text Book, Ch.2
Differences
- Concepts of Comparative Advantage
- Technology Differences and
Comparative Advantages
- Price Determination in Trade
- Gains from Trade

Comparative Advantages due to Differences Text Book, Ch.3

in Resource and factor Endowment
- Relative Differences in Resource and
Factor Endowment
- How these differences create
Comparative Advantages
- Trade and Income Distribution

Module 3: Economies of Scale, Imperfect Competition and International Trade

7& 8 - Economies of Scale and International Text Book, Ch.5
Trade

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 - Monopolistic Competition and
International Trade
- Inter and Intra-industry Trade
Module 4: Trade Policy, Instrument and Development
9-10 Trade Policy Instrument Text Book, Ch.7
- Tariff
- Export Subsidies
- Import Quota
- Dumping
Trade Policy and Development Strategy Text Book, Ch. 8 & 9
- Free Trade Strategy
- Infant Industry Protection Strategy
- Success Story of Infant Industry
Protection: South Korea
- Not So Success Story of Infant
Industry Protection: India

Module 5: Trade Policy Environment

11-13 Multilateral Negotiations at WTO - Portion of Ch.9 in Text Book,
Free Trade Agreement - “Understanding WTO” document
Regional Trade Agreement from WTO website
- Pal, PP. (2011) “ India and RTAs:
Getting Tangled in the Noodle
Bowl”, EPW, April 9, 2011

Guest Faculty- Parthapratim Pal

Module 6: Trade Procedures and Facilitating Measures
14 Trade Procedures and Facilitating Measures
in India Guest Faculty- Suranjan Gupta
- Documentation for Exports
- Export Financing
Trade Facilitating Measures

Module 7: Foreign Direct Investment and Business

15 What is FDI, Key Messages, World
Trends (Global and Indian) Investment Report- 2013-16,
Causes of FDI UNCTAD
FDI from Transnational
Corporations (TNCs)

16 Why Do Firm Invest Abroad? Ch. 9 of “Transnational Corporations

Ownership Advantages, and International Production” by
Location Advantages Grazia Letto-Gillies
Internalisation Advantages
17&18 TNCs and Trade Ch. 12 and Ch. 19 of “Transnational
Corporations and International
Production” by Grazia Letto-Gillies
published by Edward-Elgar

19-20 TNCs and Non-Equity Modes of Baldwin (2011)

International Production
Global Value Chain
Trade - Investment- Services Nexus

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Policy Framework for FDI, FDI and Indian Ch,4 of World Investment Report-
Industrialisation: “Make in India” 2015, UNCTAD
Rao, K.S.C and Biswajit Dhar, “The
Tenuous Relationship between Make
in India and FDI Inflows”, Policy
Brief, ISID

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Course Policies:

1. Responsibility for Course Materials: You are responsible for all material covered in
class. If you are absent, you are responsible for obtaining the information you missed.
2. Classroom Behaviour: We expect you to participate in class activities in a mature and
appropriate manner. Disruptive or otherwise unacceptable behavior will not be
tolerated.
3. Mobile and Laptop Use: Mobiles and laptops are not permitted in the classroom. I will
let you know beforehand if laptop is required for a class. In the class, you must keep
your laptop down unless asked by the instructor.
4. Academic Conduct: All members of the academic community at IIM Kashipur are
expected to practice and uphold standards of academic integrity and honesty. Academic
integrity means representing oneself and one’s work honestly. Misrepresentation is
cheating since it means students are claiming credit for ideas or work not actually theirs
and are thereby seeking a grade that is not actually earned. Following are some examples
of academic dishonesty:
i. Cheating on quizzes and examinations. This includes using materials such as
books and/or notes when not authorized by the instructor, copying from
someone else’s paper, helping someone else copy work, substituting another’s
work as one’s own, theft of exam copies, or other forms of misconduct on exams.
ii. Plagiarizing the work of others. Plagiarism is using someone else’s work or
ideas without giving that person credit; by doing this students are, in effect,
claiming credit for someone else’s thinking. Whether students have read or
heard the information used, they must document the source of information.
When dealing with written sources, a clear distinction should be made between
quotations (which reproduce information from the source word-for-word within
quotation marks) and paraphrases (which digest the source of information and
produce it in the student’s own words). Both direct quotations and paraphrases
must be documented. Even if students rephrase, condense or select from another
person’s work, the ideas are still the other person’s, and failure to give credit
constitutes misrepresentation of the student’s actual work and plagiarism of
another’s ideas. Buying a paper or using information from the World Wide Web
or Internet without attribution and handing it in as one’s own work is plagiarism.
iii. Falsifying records or providing misinformation regarding one’s
credentials.
iv. Unauthorized collaboration on computer assignments and unauthorized
access to and use of computer programs, including modifying computer files
created by others and representing that work as one’s own.
v. Unless they specifically indicate otherwise, instructors expect individual,
unaided work on homework assignments, exams, lab reports and computer
exercises, and documentation of sources when used. If instructors assign a

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 special project other than or in addition to exams, such as a research paper, or
original essay or a book review, they intend that work to be completed for that
course only. Students must not submit work completed for a course taken in the
past or for a concurrent course unless they have explicit permission to do so from
both faculty members.

Any academic misconduct will automatically result in a failing grade for the class
and the student will be reported to the committee on academic misconduct for
further disciplinary action.

4. Attendance: As far as I am concerned, you are an adult and it is your decision whether
or not you attend class. However, your decision not to attend a class may have negative
consequences for your class grade. (Please consult PGP Participants’ Handbook for this
purpose).
If you decide to attend a class, you must come to the class and take your seat sufficiently
before the beginning of the class time. Under no circumstances you would be allowed
in once the class has started. You are expected to sit through the class unless you have
a prior permission from the instructor to leave the classroom before the end of the class.

5. Missed exam: There is no make-up for the missed exams unless the student has
discussed and made an arrangement with the instructor for a valid reason beforehand.
In all other instances, the student must produce a valid doctor's note for the day the
student missed the exam. Such doctor's note must be produced in the same week the
student missed the exam.
6. Grade Discussion: It is the student’s responsibility to monitor his or her own grades
and raise any questions s/he may have within one week of the grades assigned.
7. Extra Credit: No Extra credit shall be given to make-up for missed quizzes,
assignments, exams, project, or poor performance in the course.

Learning Accommodations
To provide equal access to the educational programs and opportunities, IIM Kashipur is
dedicated to providing appropriate accommodations to students with documented disabilities
such as attention deficit-hyperactivity disorders, physical disabilities, sensory impairments, and
psychiatric disorders in order to help them achieve their academic and personal potential. These
academic accommodations are provided to students at no cost.

Inclusivity Statement
IIM Kashipur believes that diversity and inclusiveness are essential to excellence in education
and innovation. Our community represents a rich variety of backgrounds, experiences,
demographics, and perspectives. IIM Kashipur is committed to fostering a learning
environment where every individual is respected and engaged. To facilitate a dynamic and
inclusive educational experience, we ask all members of our community to:
• be open to the perspectives of others
• appreciate the uniqueness of their colleagues
• take advantage of the opportunities to learn from each other
• exchange experiences, values, and beliefs
• communicate in a respectful manner
• be aware of the individuals who are marginalized and involve them
• keep confidential discussions private