BEC 2300 International Trade Theory and Practice


Amanda Herath


Master of Global Economy and Strategy (Yonsei, South Korea), BBA (Business Economics, Colombo)

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N.W.H Rvihari


Course Outline

Name of the Course- International Trade Theory and Practice

Course Code- BEC 2300

No of Credits – Three (03)

Course Facilitators-   Ms.H.M.S.Amanda N. Herath                              

Objective of the course-

  • To improve the knowledge of students on importance of international trade.
  • Impart an understanding of trade theories and international trade policies.

Learning Outcomes-   At the end of the course students will be able to;

  • Explain major economic theories of international trade.
  • Analyze their application to real world scenarios.
  • Explain various policy tools adopted by governments to address international trade.
  • Discuss the international political economy of international trade and its impact on developing countries.

Pedagogical Methods- Classroom lectures, discussions, case studies, assigned readings via online platform

Assessment Method -   Continuous Assessment – 30%

  • In–class Quizzes (2 marks x5) – 10%
  • Group Presentation – 20%

Semester End Examination – 70%           

Course Contents-

Part I- International Trade Theory

1. Introduction and Overview

2. Mercantilism, Absolute Advantage and Comparative Advantage

3. Heckscher-Ohlin Theory (Factor-Proportions Theory)

    Stolper-Samuelson Theorem

    Leontief Paradox

4.  Modern Trade Theories

  • International Product Life Cycle
  • Theory of Overlapping Demand
  • Porter’s Diamond Theory of National Competitive Advantage
  • The Gravity Equation

5. International Factor Movements

  • International movement of Capital (FDI)
  • International movement of Labour
  • International movement of Enterprenuership

Part   II- International Trade Policy

6. The Instruments of Trade Policy

  • Tariff Analysis
  • Other Instruments of Trade Policy (Non-tariff Barriers)

7.The Political Economy of Trade Policy

  • Free Trade
  • Protectionism and National Welfare Arguments    

8. WTO and International Negotiations and Integration

9. Trade Policy in Developing Countries

10. Concluding Session


Recommended Text-

Krugman,P.R, Obstfeld,M. (2009).International Economics;Theory and Policy, (8th Ed), Pearson Education,Inc.

Carbaugh, Robert J., (2009), International Economics (12th Ed), South-Western Cengage Learning.

Course content

  • Trading Under Increasing Opportunity Cost

  • Factor Endowment Theory

  • International Product Life Cycle (IPLC)

  • National Competitive Advantage

  • Trade Integration and WTO

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