Dr David Luke (Firoz Lalji Institute for Africa, 8th Floor Pethick-Lawrence House)

This course is available on the Double Master of Public Administration (LSE-Columbia), Double Master of Public Administration (LSE-Sciences Po), Double Master of Public Administration (LSE-University of Toronto), MPA Dual Degree (LSE and Hertie), MPA Dual Degree (LSE and NUS), MPA Dual Degree (LSE and Tokyo), MPA in Data Science for Public Policy, Master of Public Administration and Master of Public Policy. This course is available as an outside option to students on other programmes where regulations permit.

Priority will be given to SPP students.

This is a course in trade policy from a development perspective rather than a course in international economics or trade economics.  The course offers insights into trade theory but use of or familiarity with mathematical models related to trade theory is not required.

This course examines the role of trade policy in shaping development outcomes. Trade policy is understood to be the set of practices, strategies, laws, regulations, agreements and institutions that govern international trade or imports and exports of goods and services between countries. The course applies a political economy approach to trade policymaking and analysis at the country level. This takes into consideration the interests, ideologies and values underlying agenda-setting, implementation and the results of trade policy. These are key factors against which trade policy can be assessed in relation to sustainable and inclusive development.

The course begins with an overview of the theoretical foundations of comparative advantage, specialization, and new trade theory. The gains (and losses) that can be derived from trade form part of this overview to explain why trade matters for development, the thematic emphasis of the course. This is followed by an assessment of the structure of global trade flows over the last eight decades to uncover changing and enduring patterns of specialization in international trade and their relationship to development outcomes. Case studies drawn from the Global South are utilized to illustrate this relationship. An aspect of specialization that is brought into focus for its broad development implications is the so-called ‘natural resource curse’. Data sources and their limitations and how to use the main databases on trade flows is explained. The role of bilateral, regional, and global trade agreements in changing and shaping specialization is assessed. Emerging trends including embedding normative concerns such as labour standards, gender equality, climate and environmental sustainability in trade agreements are explored. Key principles for negotiating trade agreements are reviewed and a trade negotiation simulation exercise is carried out for which marks are awarded.

In concluding the term, the material covered during the lectures and seminars will be synthesized with emphasis on agency and the interactive dynamic of actors such as governments, business, and civil society and the coalitions and factions within and between them, in shaping and reshaping comparative advantage and specialization.

15 hours of lectures and 18 hours of seminars in the AT. 2 hours of seminars in the ST.

• The workshop will be devoted to a trade negotiaton simulation exercise.
• A reading week will be observed during the sixth week.
• One seminar will be devoted to revision of course material  and held towards the end of the spring term in prepration for the spring exam.

1000 words formative essay on the political economy of trade policymaking at country level and taking insights from new trade theory into account.  No marks are awarded for this essay but detailed feedback will be provided.

Trade Theory

• Krugman, Paul, Maurice Obstfeld, and Marc Melitz. International Economics: Theory and Policy. Global edition 2022.

Natural Resource Curse

• Venables, A. “Using Natural Resources for Development: Why Has It Proven So Difficult?” Journal of Economic Perspectives 30 (1): 161–84. 2016.

Trade Policy, Structural Transformation, Inclusion

• Rodrik, D. and Stiglitz JE, A New Growth Strategy for Developing Nations, 2024.  (Copy at http://tinyurl.com/ymrg8qom).

Inter-American Development Bank, The Political Economy of Trade Policy in Latin America, 2022. https://publications.iadb.org/en/political-economy-trade-policy-latin-america

• Economic Commission for Africa 2017. Transforming African Economies Through Smart Trade and Industrial Policy. 2017.

• Lin, Justin & Chang, Ha-Joon. “Should Industrial Policy in Developing Countries Conform to Comparative Advantage or Defy It? A Debate Between Justin Lin and Ha-Joon Chang”. Development Policy Review. 27. 483-502.2009.

Trade Negotiations and Agreements

C. Van der Ven and D. Luke, Africa in the WTO, in D. Luke (ed.), How Africa Trades. LSE Press. 2023.

• Jones, E. Negotiating against the Odds: A Guide for Trade Negotiators from Developing Countries. Palgrave Macmillan. 2013.

Exam (50%, duration: 2 hours) in the spring exam period.
Report (35%) and group exercise (15%) in the AT.

• 2-hour exam during the spring exam period exam requiring two essay-type questions to be answered from a choice of five questions. This is worth 50%.
• 3,000 words report outlining the trade policy of a developing country drawn from research on the political economy and related information about the country and explaining the strategy for implementation and monitoring the expected outcomes.  This is worth 35%.
• Group work on a practical trade negotiation simulation exercise and an individual report on lessons learned from the exercise.  The individual report is worth 15%.