Excellence in

MBA 2012 The World Economy
Contacts hour per week
Frenkel, Michael
Not eligible for exchange students!
This course introduces the main international aspects that are relevant for firms involved in international business transactions and discuss sepcial features of the European integration process. The global business environment involves trade, international investment and foreign exchange operations. The topics covered in the course explore how economic linkages between countries affect the optimal decision of firms and how they affect domestic economic developments. European aspects focus on trade integration and the monetary unification process.
Course description
1. The Global World Economy as the Environment of International Business
  • Globalization: the meaning, the reasons, and the implications
  • Globalization and international business
  • How international transactions are recorded countrywide
  • A case study
2. International Trade
  • Opening case: The case of Ghana and Kenya
  • Why do countries trade?
  • What are the consequences of trade: Who wins and who loses?
  • Business implications
  • Closing case: Trade in information technology and U.S. economic growth
3. Trade policy: Does it make sense?
  • Instruments of trade policy and their effects
  • Who wins and who loses
  • What position should international business adopt?
4. Foreign Direct Investment: Rationale and Policies
  • The different forms of FDI
  • The empirical evidence
  • Why FDI when there are alternatives?
  • FDI Policies
  • Case studies: German carmakers in the U.S.A.
5. Regional Economic Integration and the European Economy
  • Different levels of regional economic integration
  • Does regional integration make sense?
  • How different are European countries?
  • The common agricultural policy
6. Trade Integration in Europe: The Rationale and Consequences of the Single European Market
  • The content of the Single European Market (SEM)
  • The expected effects of the SEM
  • The implications of the SEM for international business
  • Closing cases: NAFTA and the US; Agricultural subsidies and development; Drug development in the EU
7. The Foreign Exchange Market (Part I)
  • The foreign exchange market as the reflection of international transactions
  • Characteristics of the foreign exchange market
  • Different exchange rate systems
8. The Foreign Exchange Market (Part II)
  • What determines the spot exchange rate and what the forward exchange rate?
  • Case study: The curse of the strong Dollar at STMicro
9. Monetary Integration in Europe: European Monetary Union (EMU)
  • Benefits and costs of monetary unification
  • The EMU and its further expansion
  • Business effects of EMU
Teaching methods
The course combines lectures, discussions and smaller case studies.
Theories of International Trade, International Investment, Exchange Rate Operations, European Trade Integration and Monetary Unification
Hill, C., International Business - Competing in the Global Marktplace, 7th edition.
Up-to-date newspaper and magazine clippings will be distributed during the course.
Method of examination
Grades will be based on a group project (30 percent), class participation (10 percent) and a final exam (60 percent).