International Trade, Foreign Investment, Exchange Rates, and Fiscal Policy: An Overview

TOPIC 1: The implications of national strategic considerations for patterns of international trade and foreign direct investment

There are three questions in the Test, one based on each topic. You will only have to answer one question. Preparation should start with the documents in the relevant UNIT (s) of the module.

TOPIC 1: The implications of national strategic considerations for patterns of international trade and foreign direct investment, and how these can be accommodated into theories of these two international transactions.   This topic requires an understanding of the two topics: international trade and foreign investment. You should focus on:

? The growth of international trade and foreign direct investment (FDI) and their slowdown in recent years. Explanations for the slowdown in trade and FDI.

? What constitutes national strategic considerations and how these might also be viewed as forms of protectionism.

? Mechanisms for achieving protectionism.

? The merits, disadvantages and risks associated with protectionist policies towards trade and investment, taking into account international trade theory and foreign investment theory

? How strategic considerations can be (or are already) built into existing trade and foreign investment theory.

TOPIC 2: A comparison of an analysis of market fundamentals with the Purchasing Power Parity theory of exchange rates for predicting exchange rate movements.   

This topic requires an understanding of the topic: Exchange Rates.  You should focus on:

? Exchange rates and why predicting their path is difficult

? The Purchasing Power Parity theory of exchange rates and a critique of this theory

? The market fundamentals that determine exchange rates    

TOPIC 3: Fiscal policy: the measures used in response to the economic impact of the Covid-19 pandemic and their impact on national finances and future economic growth.  

This topic requires an understanding of the topic: Fiscal Policy.  You should focus on:

? The economic impact of the Covid-19 pandemic (partly the result of lockdown measures taken by governments on health grounds)

? What is fiscal policy and the general fiscal policy measures countries have taken in response to the economic impact of the pandemic (or Great Lockdown Crisis)

? Why spending has increased (discretionary and non-discretionary) while tax revenues have fallen.

? How and why the current ‘Keynesian’ response in most countries is different from the austerity response and reliance on monetary policy after the Great Financial Crisis

? The legacy of large deficits and debt on future economic growth and the economic policy options open to governments to reduce deficits and debt    

GENERAL REQUIREMENTS

• Answer ANY ONE OF THE THREE QUESTIONS

• Word limit 1200 words (+/-10%) (references are excluded from the word count)

• Your answer should be illustrated wherever possible by examples

Your answer will be subject to electronic checking for plagiarism. It must be written in your own words (except for quotations), be properly referenced and conform to an essay structure. That is, it must have an introduction stating the scope of the answer, paragraphs that focus on specific building blocks of the answer, and a conclusion that is based on the content of the answer and directly relates back to the subject of the answer. Your essay must be written as a continuous discussion with no sub-headings or bullet points. The discussion must be supported by examples, data and references cited in the text. A list of references must be provided at the end of your essay, which must cite predominantly book/journal articles and authoritative sources.  

As is normal practice in the Business School, anyone found to have plagiarised material is likely to fail the module and may be subject to other disciplinary procedures.

Questions will require you to either Assess or to Discuss the question. Please ensure that your answer is either a discussion or an assessment.