TITLE: TRADE THEORY & POLICY

Chosen country - Germany.

Chosen topic - Economic growth

The prime minister/Chancellor of Garmany is being pressurised by the World Bank to further integrate into the global economy by facilitating trade. The prime minister is hesitant and particularly concerned about the potential effect of trade in Germany. She puts you in charge of writing a report on the topic.

MUST ATLEAST REFER BACK TO SOME OF FOLLOWING TOPICS:

1- Ricardian Model

2- The Specific factors model

3- The Heckscher-Ohlion Model

4- Krugman Model/The standard Trade Model

5- The Melitz Model

6- Trade policies (Quotas, tariffs, welfare analysis, export subsidy)

7- The political economy of trade (mechanisms through which domestic political

considerations influence trade policies)

8- Multinational Firms, growth, transfers, offshoring goods and services

The report should contain the following sections:

1. Highlights. It should give the 3 to 5 main takeaways of your essay, in bullet points.

2. Description of the context. You should give a succinct description of the trade patterns of Garmany, its openness to trade, its trade balance, and its recent evolution over the past 40 years, with respect to neighbors and similar countries. One graph for each should be included. Also comment on the composition of exports and imports (raw materials, agricultural products, manufacturing, high tech, tourism, financial services) and on trading partners (very diversified, mainly rich countries, mainly poor countries).

3. Theoretical background. Use different models, should not be limited. You may refer to other models in the literature and to arguments that you carefully developed yourself. You do not need to be exhaustive, concentrate on just a few (2 or 3) mechanisms that seem the most relevant to you.

4. Policy recommendation. It should mention whether you recommend that Garmany pursues opening to trade or instead maintains or increase trade protection, in particular in the view of addressing the concerns of the prime minister concerning Garmany. It should also identify the possible winners and losers of your recommendations, and suggest measures to make them acceptable to the largest number.

5 A conclusion.

(Give References)