International trade and investment with Michael Frenkel

July 29, 2013

To my surprise the lecture room was almost completely filled for the course International Trade and Investment with Michael Frenkel: it seemed that the name of this course contained all the buzzwords people are looking for when they search for interesting courses. Since this course was given for the first time at Sasin it was still a bit of a risk to sign up for it; there were no reviews available from previous years meaning nobody had an idea of the workload, the style of teaching, and how useful this course would be. By the way, with reviews I mean the word-of-mouth information some people get from the previous class since we do not get any information about the reviews we hand in to Sasin.

The book used for this course. It appears to be pretty good but I never really opened it...

The book used for this course. It appears to be pretty good but I never really opened it…

As expected this course fitted well with Macroeconomics with Piyachart Phiromswad that we did in our previous year, although the focus here was slightly different. Of course there were some demand and supply curves with deadweight losses hidden in there and absolute and comparative advantages, but the focus was much more on trade between countries and what drives that trade. The bottom line is still that trade is good, in the long run at least, and the main reason for people protesting against opening a country up is that producers are often better organized than the silent majority; the consumers who all profit a little but combined outweigh the loss of the producers.

Demand and supply with a tariff. No macroeconomic subject is complete with a graph like this.

Demand and supply with a tariff. No macroeconomic subject is complete with a graph like this.

And we learned next time someone mentions “lower labor costs” as a reason for outsourcing you can confidently punch him in the face, that is my interpretation at least but you will have to face the consequences yourself, to point out that they should look at the “unit labor costs” instead, since productivity differs between countries.

Yes, that is a basket of goods used to calculate the consumer price index.

Yes, that is a basket of goods used to calculate the consumer price index.

Where this course could improve, in my view at least, was in the depth of discussing real-life examples where things went wrong. Near the end of the course we went into some detail where problems arise within the European Union, but almost every other part of the course could also have been illustrated with interesting historical episodes. Reading through the basics is something we could do at home leaving more time in class to go over Bretton Woods, the ASEAN union, dollarization, currency crisis, and how these events influenced trade and investments in the effected countries. With a professor who has hands-on experience with implementing policies for the IMF there have to be stories and cases enough that can be further explored.

Michael Frenkel teaching at Sasin

Michael Frenkel teaching at Sasin

What was surprisingly interesting to do was to write a report for a selected company with a selected product to advise them to which country to expand next. Here we got some experience on how to put everything we learnt so far into practice and compare countries based on political and macroeconomic factors, on trade-agreements and comparative advantages, and on country unique qualifications. During the final lecture we had to present our approach and findings and it was quite interesting to see how other groups approached this similar assignment.

The final report that we presented in class about how we would conquer the world with our AEDs.

The final group report about expanding a company abroad. Notice how we refer to “lower unit labor costs” instead of lower labor costs to avoid being punched in the face.

Finally there was also an exam, which took only 75 minutes instead of the normal 3 hours. While this worked out fine with my limited attention span it still resulted in some missed credits due to missing certain parts of the question due to the abnormal early exam time of 9AM, something I am not used to anymore after 4 months of holiday and no 9AM classes for some time already. Maybe I should have imported some extra strong coffee from around the world well before this exam, but in my defense, I had no idea how to set something up like that before this class. 

For questions/remarks you can contact me at: eric@stuckinthailand.com

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