Fall 2011 Harvey Lapan

Paper Topics for Econ 455:

TOPIC: Any topic related to International Theory or Policy is potentially acceptable. You must submit a written proposal before writing the paper so that I approve the topic; this proposal is due October 14, 2011. In the past students have come up with some very clever ideas, ones that had not occurred to me – so do not feel constrained by the suggestions below. But do make sure I have approved the proposal before investing too much time in your choice – some previous students have also (unsuccessfully) proposed topics that had absolutely nothing to do with international economics.

Paper Length/Details: I do not like to specify a minimum, or maximum, length as the content of the paper is more interesting to me. I expect you to research and provide a thorough discussion of the topic you have chosen (upon which we shall have agreed). If you collect some data relevant to the topic, that is fine, and if you do some original research that is even better (though it is not required).

For those who feel a need to have some lower bound on paper length, I would suggest the paper should not be shorter than 10 double-spaced pages, with normal margin and normal font size. However, this is meant as a guideline and will not be enforced if, for example, I think you have handled your topic well in 7 pages. There is no upper bound on paper length.

You may, of course, use the web or any other resource to gather material. However, you must use some reference materials in addition to the web – books, newsmagazines, journals, etc. The paper must be your work, in your own words. You may not copy substantial amounts of material from a source, and you must provide citations for sources and indicate clearly material that is directly copied from a source. As noted on the syllabus, plagiarism on the course paper will result in a failing grade for the paper AND the course.

POTENTIAL TOPICS:

An important part of the research process is to search for, and research, a topic that is important to you. Thus, I hate to list topics because: (1)I do not want you to think I am excluding other topics that may interest you; and (2)I would prefer you do some creative thinking about your own topic. However, on the next page is a very brief (and unimaginative) list of some topics. Immediately below are some of the hottest current topics:

1. Proposed Free Trade Areas: – there are many proposals for establishing free trade areas in Asia or the Americas. The US has completed free trade agreements with a number of countries (see USTR web site); there is a free trade area among some countries in South America (Mercosur); etc. What are these proposals and what problems do they face? How will they affect the U.S.?; how will they affect countries that are not part of the free trade area? Are there any additional difficulties in enforcing free trade rules when economies in which the central government plays a large role are part of the free trade area? How have the various free trade agreements into which the U.S. has entered affected trade among the participating countries and employment in each country?

2. US-European Trade Disputes - over the years there have been a number of trade disputes between these two economic blocs, even though they are usually good allies (with the exception of the Iraq war). Many of these disputes have involved agricultural products, such as disputes about trade in genetically modified organisms (GMs) – though recently settled disputes concerned trade in steel and other current disputes focus on U.S. tax rebates for firms exporting goods and the role of each bloc in subsidizing domestic aircraft manufacturers (the EU subsidizes Airbus, the US defense program may be deemed a subsidy to Boeing). What should international policy be on GMs? Should each country be allowed to regulate these products as it sees fits? Should countries harmonize tax policies so that disputes such as the current one are avoided?

3. Trade and the Environment - another issue, especially with respect to trade between richer and poorer countries, concerns the impact of trade on environmental goals and whether trade pacts (like NAFTA) with the poorer countries somehow hurt the environment or put US firms at a disadvantage because of stricter US environmental rules. Also, what are the prospects for a global treaty to replace the Kyoto Treaty (which the US did not sign)? If countries agree to specific targets to limit pollution, should these “pollution rights” be tradable between countries? Should developing countries be exempted from international environmental standards since the current “rich” countries did not face such standards when they were developing? Does trade promote a “race to the bottom” in the sense that environmental standards tend towards those of the country that does the least to protect the environment? Should trade agreements and environmental agreements be made jointly?

4. Labor Standards and Trade - should international trade policy also include an attempt to impose (US or European) labor standards on other, poorer countries (for example, concerning age, working conditions, number of hours worked per day, etc)? If so, whose standards should be used? Should there be any restrictions on trade in goods produced by prison, or slave, labor? What are the economic implications of doing so?

5. Globalization and the World Economy – What does “globalization” mean? Do international agreements (through the World Trade Organization (WTO)) limit national sovereignty and is that a “good” or “bad” thing? Should countries be allowed to protect certain industries, e.g., those that are central to “national culture”? If so, where do you draw the line about which goods can be protected?

How important are Multinational firms (MNFs) in the world economy? What fraction of world output do they account for, and are they beneficial or harmful? Does the power of MNFs to move anywhere in the world restrict policies of individual governments? Should there be rules limiting their spread?

6. Immigration Issues – immigration issues have played a large part in U.S. domestic policy and, with the recent Arizona law, these issues are an important part of some Congressional races. What should U.S. immigration policy be? Given immigration limits, how should the U.S. decide which people to admit? (e.g., admit relatives of legal U.S. residents; admit only the best trained people; sell the rights to immigrate to the U.S.; etc.). How should the U.S. deal with current illegal immigrants in the country and what implications does this have for future immigration?

7. Wage Inequality and Trade – data indicates a growing gap between the wages for skilled and unskilled labor, and several candidates have made this part of the Presidential campaign. What role has trade and immigration played in this process? What implications does outsourcing have for this trend? What policies, if any, should the U.S. take to offset this trend.

8. Global Stability and Trade – for those with a macroeconomic orientation, you might want to research the interrelationship between international trade and recessions. Has trade made the current recession worse, or less bad, than it would be if there were no trade. What is the standard relationship between GDP and trade volumes, and how has this relationship changed in past, and the current, economic slowdowns.

9. Globalization and Stability – a related topic (to #8) concerns the question as to whether globalization – especially in financial markets – contributes to financial stability or instability. What impact, if any, did globalization have on the current financial crisis (perhaps the worst since the Great Depression). Does globalization make it harder for governments to regulate firms (as they can move abroad) and does globalization therefore require more cooperation among governments to achieve effective regulation?

TRADE AND DEVELOPMENT ISSUES: SOME SUGGESTIONS

· History of tariff rates, and tariff laws, in the United States (or Spain, UK, Japan, etc.); for example, compare the tariff liberalization period in the late 1800's to 1930's to today’s policies.

· History of immigration laws in, and immigration flows to, the U.S. (or some other country) {again, could compare historic trends and policies to current periods}.

· Immigration Law: if a country restricts immigration, how should it decide who is allowed to enter the country? Should the immigration laws favor the most skilled? How is this decision actually made in different countries?

· History of International Trade Agreements under GATT/WTO

· In depth treatment of some topic under GATT or WTO, such as: Dispute Settlement Process; Agriculture and the GATT, Dumping, …

· Some aspect of US Trade Law, and its implementation, including: Antidumping Laws, Countervailing Duty Laws, Section 301, Escape Clause (Section 201)…

· Study of (history and current) protection for some particular industry, including: Autos, Steel, Sugar, Textiles and Apparel, Footwear,… (in US, or elsewhere)

· Intellectual Property Rights Protection and International Issues {for example, differences in patent systems; affect of enforcing patent protection on developing countries;…}

· Pharmaceuticals and Intellectual Property – should pharmaceutical companies, which have patents on life-saving drugs, be forced to make these drugs available at low prices to poor countries (e.g., AIDS drugs)? Should poor countries be allowed to produce these drugs, even though Western firms have patent protection? What is the current status of such agreements?

· Pharmaceuticals and Trade: Should there be restrictions on re-imports into the US of drugs sold abroad (for example, should drugs sold in Canada be allowed into the US)? In practice, how large are the price differences and what are the economic implications of allowing such importation?

· Health, Safety and Food Standards - and possible sources of international frictions and use as trade barrier

· Managed Trade and Strategic Trade Policy - should governments pick winners and losers; analyze some specific policy (e.g., in US Semiconductor Industry, or Japanese policy,…)

· Free Trade Agreements and Common Markets - could look at NAFTA, or European Union, or Mercosur, or large number of agreements around world (failed past agreements or current agreements);

· Trade Flows and the Predictive Power of Various Economic Models (Heckscher-Ohlin, Ricardian,…)

· Trade and the Distribution of Income - how have trade flows affected income distribution (look at wage differences across countries,…; look at some possible sources on reading list)

· Developing Countries and Trade Policy: what policies have been pursued, and what is the relationship between trade policies and economic performance

· Trade Flows and Human Rights - there are a number of contemporary issues (especially with the PRC): prison labor and trade, working conditions, child labor laws,…, etc.

· Trade and Environmental Issues - does trade lead to environmental deterioration?; should countries be able to ban products that are produced in environmentally “unfriendly” ways; etc.

· Gender Issues and Trade Practices: how does international trade affect poverty in LDCs, and are women affected differentially (UN Study and Conference)

· Capital Flows and International Trade

· Foreign Direct Investment: US Multinational investment abroad (and direct investment in US); data, causes, issues both economic and sovereignty

· Subsidies and Trade: role of local tax/subsidy policy in affecting plant location and trade patterns (e.g., US localities have offered subsidies to attract foreign plants, such as Mercedes)

· Foreign Aid and Trade: historically, a number of countries have stipulated that foreign aid given to poor countries has to be spent in the donor country (this is sometimes called “Tied Aid”). What are international agreements related to Tied Aid Credits, and what are the economic implications?

· Outsourcing – what is outsourcing? How significant has it been and what is the likely impact on the U.S. economy?

· U.S. Tax Policy towards multinationals: what is U.S. tax policy towards profits earned by U.S. firms abroad. Does the tax policy make economic sense? Does it hurt U.S. employment?