This is a course about the causes and consequences of economic globalisation. It explores how tumbling transport and communication costs, digitalisation, and trade and financial liberalisation have driven the integration of international economies in recent decades, contributing to increased global prosperity, new market opportunities and the diffusion of ideas, but also to greater inequality and new political and social challenges. The course provides an overview of the two main sub-categories of the subject, namely international trade and international finance, and seeks to assess the impact that digitalisation and Internet connectivity is having on economic globalisation. • We will first study the forces underpinning international trade in goods and services, the costs and benefits of free trade, the trade policy options facing governments, and the role of international organisations in trade governance. • We will then move on to study the forces driving cross-border financial flows and the determination of exchange rates. We will briefly address the history and organisation of the international monetary system, the different forms of exchange rate management, and the causes and consequences of the different international financial crises that periodically beset economies. • Finally, the course will seek to explore how the rise of the digital economy, and the cross border flow of data, is shaping globalization.
Type Subject
Previous Knowledge

A key course objective is to enlighten students about the workings of the international economy and its financial underpinnings. It aims to provide students with sufficient knowledge of the topic not only to make better business and investment decisions, but to understand and participate more fully in some of the key debates about international economic integration and policymaking, international relations and global financial stability.
The course will introduce students to the main theories of international economics and finance, but will seek at all times to relate these theories to real-world developments. It will also seek to identify how the expansion of digitalization, and the global expansion of broadband internet access, might be affecting globalization.

On the completion of this course students should have gained the following competences:
• To understand the main forces driving international trade and financial flows
• To assess the costs and benefits of these flows
• To understand the determination of exchange rates.
• To understand how government policies affect trade, capital flows and exchange rates.
• To understand the factors that periodically trigger international financial crises
• To develop a basic knowledge of the roles of international organisations in both trade and financial governance
• To identify how the rise of new digital technologies is shaping globalisation
• To undertake basic country and political risk analysis and be able to participate in international policy debates


Topic 1 - Introduction and overview.
Topic 2 - The Great Convergence? | Our World in Data Project.
Topic 3 - Ricardian Model: comparative advantage and the benefits of free trade.
Topic 4 - Income Distribution. Trade’s winners and losers | Factor Price Equalisation – global wage and interest rate convergence.
Topic 5 - Immigration and Factor Price Equalisation.
Topic 6 - Trade Wars and Protectionism.
Topic 7 - The impact of digitalisation on trade in goods and services. Internet governance issues, digital protectionism.
Topic 8 - The Balance of Payments: global imbalances and global aggregate demand.
Topic 9 - Exchange Rates in the Short Run: the interest parity condition and the role of monetary policy | Exchange Rates in the Long Run: purchasing power parity (PPP) and the real exchange rate.
Topic 10 - Fixed Exchange Rates and Foreign Exchange Intervention - balance of payments crises. | The international Monetary System: the Gold Standard, the Bretton Woods system and the International Monetary Fund (IMF), the European Monetary System (EMS) and the Euro. Optimum Currency Areas and the case for floating exchange rates.
Topic 11 - Financial Globalisation: the role of digital technologies.


The course will follow broadly the structure set out in the textbook International Economics: Theory and Policy, by Paul Krugman and Maurice Obstfeld, but without going into the same level of detail. It will provide an overview of the main theories in the field, but maintaining a strong focus on trying to understand the functioning of the global trade and financial system. I will distribute lecture notes and regularly post reading material on the eStudy. Most of the readings will consist of newspaper or magazine articles, from sources such as the Financial Times or the Economist, which can shed light on the main international trade and financial issues in an accessible, user-friendly language. Students will be required to read and subsequently discuss these articles in class, familiarizing themselves with the main sources, language and current topicsin international economics. Students will also participate in a course-long group project, building up a profile of both the world economy and the economy of a country of their choice, and exploring the interaction and dynamics between the two.


Participation 15%
Mid-term 30%
Course project 25%
Final examination 30%

Retake policy: students who fail the course (weighted average grade <5) can sit a retake exam which retests all the material covered in the course. The students’ course grade will then be the weighted average of the retake grade (60%) and the student’s original grade for the course project, attendance and participation (40%).

Evaluation Criteria
Basic Bibliography

For a survey of the main theories of international economics, the main textbook of reference is:
• Krugman, Paul and Obstfeld, Maurice, INTERNATIONAL ECONOMICS: THEORY AND POLICY. Pearson International Edition.

A good backup text for international finance topics is:
• Pilbeam, Keith, INTERNATIONAL FINANCE. Palgrave Macmillan

An overview of the basic principles of international economics is also available in the relevant chapters of:
• Mankiw, N. Gregory and Taylor, Mark P., ECONOMICS, Cengage Learning EMEA.

Other sources:

Additional Material

Wolf, Martin (2004) Why Globalization Works. Yale University Press.
Wolf, Martin (2009) Fixing Global Finance: How to Curb Financial Crises in the 21st Century. Yale University Press.
Reinhart, Carmen M. and Rogoff, Kenneth S. (2009) This Time is Different: Eight Centuries of Financial Folly. Princeton University Press.
Acemoglu, D., & Robinson, J. A. (2012). Why nations fail: The origins of power, prosperity, and poverty. New York, NY: Crown.
Krugman, Paul (1998) The Accidental Theorist. W.W. Norton & Company.
Stiglitz, Joseph E. (2002) Globalization and its Discontents W.W. Norton & Company.
Keynes, John Maynard (1932) Essays in Persuasion.
Clark, Gregory (2007) A Farewell to Alms: A Brief Economic History of the World. Princeton University Press.
Bernstein, William J. (2008) A Splendid Exchange: How Trade Shaped the World. Grove Press.
Eichengreen, Barry (1992) Golden Fetters: The Gold Standard and the Great Depression 1919- 1936. Oxford University Press.
Brynjolfsson, Erik and McAfee, Andrew (2014) The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies. W. W. Norton & Company Digital Globalization: The New Era of Global Flows. McKinsey Global Institute (MGI), 2014.