What are the implications of the developments mentioned in the articles to the global economy

BECN 9801

International Economics

Major Project – Winter 2018


The purpose of this project is for you to prepare a summary report on the paper by the Economist magazine. The links to these articles have been posted below. Please let me know if you have any issues accessing them. The paper you prepare should be structured in the following manner:

a. Summarise the main argument or thesis of the report. In effect, a precis. (20%)

b. Discuss in detail how the report incorporates (directly or indirectly) three key theories we have discussed in class. This is designed for you to understand how these theories are evident in practice (40%)

There are the theories in class..

– The Stolper-Samuelson theorem demonstrates how changes in output prices affect the prices of the factors when positive production and zero economic profit are maintained in each industry . It is useful in analyzing the effects on factor income, either when countries move from autarky to free trade or when tariffs or other government regulations are imposed within the context of a H-O model.

– The Heckscher-Ohlin model is a theory in economics explaining that countries export what can be most efficiently and plentifully produced. This model is used to evaluate trade and, more specifically, the equilibrium of trade between two countries that have varying specialties and natural resources. Emphasis is placed on the exportation of goods requiring factors of production that a country has in abundance and the importation of goods that a nation cannot produce as effectively.

– Tariffs are used to restrict imports by increasing the price of goods and services purchased from overseas and making them less attractive to consumers. A specific tariff is levied as a fixed fee based on the type of item, for example, $1,000 on any car. An ad-valorem tariff is levied based on the item’s value, for example, 10% of the car’s value.

c. What are the implications of the developments mentioned in the articles to the global economy. Here you should present your opinion (20%)



The remaining 20% of the grade will reflect grammar, writing style, sentence structure and clarity. It will also reflect professionalism in its appearance and presentation. This should be prepared as if it is being submitted to a senior executive committee. It must include a cover page with an appropriate title relevant to the issues you discuss, your name, course name and course section. Supporting tables, charts, and your references must be included in an appendix. Please also note that I may exercise my right to an oral review of this paper if deemed necessary.

In terms of addressing implications to business responds, you may discuss business in general, a particular business sector, or an individual company.

You are expected to conduct further research on the issues mentioned in this article. I will be looking for at least 5 article references that must be included in your report. Each section MUST be properly headlined so I can grade these.

Each section will be graded according to the following criteria:

<50% – Fails to address the question

50-59% – Addresses the question minimally, with little or no support offered for the answer

60-69% – Addresses the question fairly, but offers little support from facts or theory

70-79% – Addresses the question fairly, with some support from facts and theory, but no particular insight

80-89% – Addresses the question well with complete and sufficient support from facts and theory with good insight and understanding

90% + – As above but offers an insight and personal interpretation from the case not apparent in its wording. Shows an exceptional understanding of the concepts in international economics

The report must be 5 pages – no less, 11 font, 1½ spaced. The length does not include cover page or appendixes and references. The report will be due, in hard copy, no later than at the beginning of class on April 17 or 18th, depending upon what section in which you are registered. Papers will not be accepted after that, so be certain they are printed out in a timely manner, properly bound, and ready to submit at the time I have requested. Properly bound means either stapled or in a bounded cover – improperly bound papers (folded or paper clip, i.e.) will not be graded.

If you have any questions, such as clarification or discussion of your points, please feel free to see me. I will be more than happy to assist you and I would strongly advise you so.