Credits: 6

Schedule: 08.01.2019 - 19.02.2019

Teacher in charge (valid 01.08.2018-31.07.2020): 

Svetlana Ledyaeva, Katariina Nilsson Hakkala

Contact information for the course (applies in this implementation): 

Katariina Nilsson-Hakkala,
Aalto University & ETLA,

Ledyaeva, Aalto University,


Tolga Benzer, Aalto,

Andrey Zhukov, Aalto,

Teaching Period (valid 01.08.2018-31.07.2020): 

III Spring (2018-2019), Töölö campus

III Spring (2019-2020), Otaniemi campus

Learning Outcomes (valid 01.08.2018-31.07.2020): 

The course introduces the students to international trade theory and applied (empirical) trade economics at the level required from applied economist. It provides essential basic knowledge of international economics for Ph.D. level courses.

Content (valid 01.08.2018-31.07.2020): 

Both traditional theories and new theories based on monopolistic and oligopolistic competition of trade and trade policy are presented and applied rigorously. In addition modern theories of heterogeneous firms, multinational enterprises and foreign direct investments are introduced. We supplement the theoretical analysis with empirical tests to help students catch the essence of these models and better understand how they can be used to address issues related to international trade and international capital movements, and their economic consequences.


Details on the course content (applies in this implementation): 

Inter-industry Specialization, Comparative Advantage,
and basic Trade Policy

Lecture 1.

Lecture 2. Comparative
(Svetlana Ledyaeva)

Lecture 3. Relative
Factor Abundance: The Heckscher-Ohlin –Model (
Svetlana Ledyaeva)

Lecture 4. Trade
Policy: Tariffs, Quotas and NTMs
(Svetlana Ledyaeva)


Intra-industry Specialization, Imperfect Competition
and Strategic trade policy

Lecture 5. Increasing
Returns to Scale and Imperfect competition
(Svetlana Ledyaeva)

Lecture 6. Intra-industry
trade and Gravity modelling
(Svetlana Ledyaeva)

Lecture 7.
Strategic & applied trade policy
(Katariina Nilsson Hakkala)

Lecture 8. Firm
heterogeneity and the Melitz model
(Katariina Nilsson Hakkala)


Multinational Firms, Foreign Direct Investment and
Labour market impacts of trade

Lecture 9. Multinational
Firms and Fragmentation of Production
(Katariina Nilsson Hakkala)

Lecture 10.
Offshoring and labor markets
(Katariina Nilsson Hakkala)

Lecture 11. Globalization
and income inequality
(Katariina Nilsson Hakkala)


Assessment Methods and Criteria (valid 01.08.2018-31.07.2020): 

Lectures and exercises, total 30h

• Exercises (15% of the final marking)
• Essay (35% of the final marking)
• Final exam (50% of the final marking)

The essay is compulsory to pass the course.

Workload (valid 01.08.2018-31.07.2020): 

  • Lectures 24 h + Exercises 6 h
  • Preparing for lectures and exam 98 h
  • Essay 30h
  • Exam 4h

Study Material (valid 01.08.2018-31.07.2020): 

Charles van Marrewijk (2012) International Economics: Theory, Application, and Policy, second edition, 2012, Oxford University press, required.

Other readings assigned during the course.

Details on the course materials (applies in this implementation): 

You are expected to read all chapters and articles allocated to each
lecture before the lectures, thank you.

Lecture notes will be published online after the lectures.

Course Homepage (valid 01.08.2018-31.07.2020):

Prerequisites (valid 01.08.2018-31.07.2020): 

Two of the advanced Microeconomics courses (31E11000, 31E11100, 31E12000, 31E12100, 31E99906 and 31E13000)

Grading Scale (valid 01.08.2018-31.07.2020): 

0 - 5

Registration for Courses (valid 01.08.2018-31.07.2020): 

Course and exam via WebOodi.


Registration and further information