Adapting International Economics Courses

Change often happens incrementally and slowly. In the economics textbook market, for example, there is an unwritten rule that new textbooks cannot differ more than roughly 15% from the standard textbook in order to be ‘acceptable’ (Colander, 2003).

While our book clearly breaks this rule and proposes more far-reaching and fundamental changes in most chapters, in this chapter we focus instead on how existing courses could be adjusted incrementally. By doing so, we hope to assist educators in improving and adapting the courses they teach without needing to rip them up and start again, as well as helping students make suggestions for how this could be done.

First, we set out the typical contents of current courses. Second, we provide our suggested additions and changes. It is important to note that we pose all these suggestions as potential sources of inspiration, not a checklist of all the things that necessarily should be included. After all, there is a practical limit to what can be taught within a single course.

Courses:

Courses on international economics are often divided into two parts: the more micro-oriented part on international trade and the more macro-focused parts on international monetary and financial matters. In the former part, the focus is generally on the theory of comparative advantage, the Heckscher-Ohlin model, and new trade theory, as well as on trade policies and agreements. In the latter part, attention is paid to the impossible trinity (often linked to some stylized international monetary history), the Mundell–Fleming model, optimal currency areas (often linked to discussions about the Eurozone), and currency and debt crises.

Frequently used textbooks:

International economics can often be an abstract topic that is difficult for students to grasp. To make the material come alive, we advise to bring students as much as possible in contact with the real world, rather than (only) focusing on theories. This can be done by teaching them about real world institutions, such as the IMF and World Bank, and let them conduct case studies. Furthermore, it can be very helpful to make them familiar with basic facts about world trade, and the roles of its own country and different economic sectors in it. But it can also be done outside of the classroom. To get a closer look and develop a feeling for international trade, students could get guest lectures or even visit a trading company and talk with their managers, workers, traders and logistics experts. Or to better understand international finance and monetary economics, they could visit a (public or private) financial institution that on a daily basis deals with such matters.

For more detail, see Building Block 2: Know Your Own Economy and Building Block 9: Problems & Proposals.

International economics courses can be enriched by including ideas from post-Keynesian and structuralist economics, as these provide different explanations and insights into issues related to trade imbalances, international capital flows, terms of trade, globalisation, free trade and protectionist policies. Furthermore, courses could treat the international monetary, financial and political trilemmas. The argument in these trilemmas is that one can always only choose two of three policy options. In the international monetary trilemma, also known as the impossible trinity, that means it has to let go of one of these three policies: independent national monetary policy, free capital movement or fixed exchange rates. For the international financial trilemma, the options are independent national financial policy, international financial integration, and financial stability. And for the international political trilemma, the choice is between democracy, national sovereignty and global economic integration. 

For more detail, see the section International Trade in the background material Pragmatic Pluralism. 

Teaching Materials

International economic systems and relations are always undergoing change, and as such it has been organized in many different ways. To help students navigate in this complex world, it is important that they learn about the various international arrangements that have existed, or have been proposed or theorized. International economic systems have many aspects from international law and organizations, to trade, agreements, relations and politics between countries. Acquiring some basic knowledge of these various aspects and the ways in which they can be organized, will help students make sense of the complex real world in which they will later work.

For more detail, see Building Block 5: Economic Organizations & Mechanisms and Building Block 6: Political-Economic Systems, as well as the sections International Trade in the background material Pragmatic Pluralism. 

Teaching Materials

While international economic theory can be highly abstract and sometimes seem even dull for many students, these dynamics have caused wars and spectacular political movements throughout history, such as the Boston Tea Party which triggered the American Revolution. Exposing students to these political struggles, especially to the clashing normative ideas behind them, can make clear how relevant the material at hand is. Furthermore, it prepares them for their future work in which normative, analytical and practical questions will often be mixed. In this regard, it is also interesting to let students critically analyse the normative visions and proposals coming from networks such as the World Economic Forum as well as its rival the World Social Forum. 

For more detail, see Building Block 1: Introducing the Economy and Building Block 10: Economics for a Better World. 

Teaching Materials

The history of trade and international economic systems is old and captivating. By acquiring knowledge about the history of the international economy, students become familiar with how complex and changing the world of international trade and finance is. Good history debunks myths and stereotypes, and gives insight into how the world of today has emerged. Teaching about the history of the international economy can also be nicely combined with teaching about the differing ways in which the international economy has been and can be organized. 

Besides the history of the international economy itself, courses on international economics can also be enriched by paying attention to the history of economic thinking on the matter. The debate about what the appropriate policies concerning international trade and finance has been ongoing since the beginning of the discipline and to this day is further developing. Knowledge of these historical debates will thus prepare students for the debates they will encounter in their careers and allow them to take part in them in a better informed manner.

For more detail, see Building Block 3: Economic History and Building Block 4: History of Economic Thought & Methods.

Teaching Materials

To create space for the above suggested additions, we advise to focus more on the key ideas and intuitions behind the taught models and devote less teaching time to their technicalities and mathematics. As teaching students to reproduce and work through mathematical models often takes up a large part of the teaching time, this would give the teachers the opportunity to devote more time to practical knowledge, the relevance, institutions, and history. Furthermore, a more even balance between neoclassical economics and other economic approaches could be achieved by decreasing the number of neoclassical ideas and models that are taught.