The International Economics (IECO) major is grounded in the belief that economic analysis is essential to the understanding of modern world affairs. With decreasing costs of transporting goods and information, market forces, which guide the international flow of goods, assets, people, technology, and information, are becoming a dominant factor in the process of globalization as well as in international conflicts. For example, when markets link countries, domestic policies such as subsidies and environmental regulation in one country affect the welfare of other countries. The integrating force of the market is redefining boundaries beyond those of the traditional nation state.
Economics is a social science that studies the behavior of social systems – such as markets, corporations, unions, international institutions, legislatures, and even families – through the lens of a unified analytical framework. That framework is built on the premise that individuals have goals and pursue those goals, subject to the constraints of resources, technology, and institutional setting. Thus, the focus is on the way individuals make decisions and how those decisions add up, and interact with one another, to produce the social systems we observe. Ultimately, economics offers insights into the study and design of policies to improve the performance of the system.
The applications of this approach to international issues are myriad, covering topics such as trade policy, international economic organizations, economic growth and development, international financial markets, financial crises, international migration, economic integration, international policy coordination, international political economy, transition to market economies, global environment and production standards, multinational corporations, international business and banking, and regional economies.
Because students receive rigorous training in quantitative techniques and objective analysis, a major in International Economics is excellent preparation for careers and leadership positions in the private or the public sector. Our students have been highly successful in areas such as finance, consulting, law, management, media, international development, international organizations, research institutes, government, non-profit organizations, and academia.
Goals of the Major
The International Economics major is designed to develop in students the ability to conduct innovative, well-informed, rigorous, quantitative analysis of all aspects of the world economy. Whether it is used in the service of business strategy, public policy, scientific research, or any other endeavor, this ability is essential to understanding the economic forces at work in the world and making sound decisions in the face of them. All students are expected to master the theoretical and empirical tools necessary to conduct such analysis. The major provides students with in-depth knowledge and opportunities for application in three main arenas in international economics:
- International Economic Theory and Policy. This concentration delves deeper into the traditional areas economics and applications to economic policy, which, in addition to international economics, includes game theory, industrial organization, labor economics, public economics, development economics and macroeconomics.
- International Commerce and Finance. The focus of this concentration is on practical applications of international economics in business and finance. The emphasis is on developing skills and institutional knowledge relevant to international commerce, investment and financial markets.
- Economic Growth, Transition and Development. The focus of this concentration is on international economics as it pertains developing countries. It places greater emphasis on understanding the challenges faced by different regions and on strategies for economic development.
Students deepen their knowledge in these areas through in-depth subfield courses. They expand their knowledge by taking supporting courses in a wide range of specialized topics within each area.
Objectives of the Major
Economics is a social science that studies the behavior of social systems – such as markets, corporations, unions, international institutions, legislatures, and even families – through the lens of a unified analytical framework. The focus is on the way individuals make decisions and how those decisions add up, and interact with one another, to produce the social systems we observe. Ultimately, economics offers insights into the study and design of policies to improve the performance of the system. To understand and apply this approach, the student must learn the following:
- The basic elements of microeconomic theory including consumer choice, the impact on resource allocation of different market structures, game theory, general equilibrium analysis, and asymmetric information.
- The measurement of output and prices, along with theories of economic growth, business cycles, and fiscal and monetary policy.
- The fundamentals of international trade and finance.
- Elementary statistics, probability theory, statistical inference, electronic data acquisition and computer applications.
- The theory and applications of regression analysis, with emphasis on the main techniques for estimating economic relationships and testing economic hypotheses.
- The application of economic theory and empirical analysis to a range of topics including labor, industrial organization, development, and the public sector.
- The elements of original research and writing, from posing a question, to summarizing the literature, modeling, gathering data, establishing causality and drawing conclusions.
Writing in the Major
The field of Economics explores complex economic systems through a combination of deductive and inductive reasoning. Early economists attempted to communicate this reasoning and results of their analyses using words alone. This resulted in long, often convoluted books that were prone to error. Over the years, economists developed mathematical models and statistical tools, which facilitated analysis, reduced error and enabled far greater transparency and brevity in the expression of results. These techniques can be difficult for undergraduates to grasp at first, which is why they are the focus of most of our teaching effort. Yet, as we teach students to build, solve, test and present economic models, we are in effect teaching them to “write” economics.
Of course, models have not entirely displaced words. Students still must learn to explain the motivation, logic and conclusions of their work verbally. This skill is especially vital for communicating with non-economists. To that end, the economics programs (ECON and IECO) integrate writing in three principal ways:
1) Explaining rationale
Tests and homework assignments require students to give short written explanations of the reasoning behind their answers, usually in one or two paragraphs. While not the norm in the first-year Principles sequence due to large class size, it is common in the 100 and 200-level core courses and universal in the 400-level advanced courses.
2) Writing short papers
Short papers require students to develop arguments, explain theories or present evidence based on research. Such essays help students learn to organize their thinking and writing. Example assignments include writing short essays that discuss the causes and possible solutions to poverty, drafting policy memos in response to case studies, and writing summaries of academic literature.
3) Producing a senior thesis
The senior thesis in economics provides students with the opportunity to develop the skills and techniques needed for carrying out a substantive original research project in economics. To achieve this purpose, the course focuses on the writing and presentation of a thesis. Students may choose from a wide variety of topics. Along the way, students learn how to evaluate scholarly literature, formulate and model a hypothesis, locate data and test the hypothesis, write an elegant paper and give a convincing presentation. This course marks the culmination of the economics and international economics majors and an introduction to the world of scholarly research.
Each student is responsible for writing an article-length paper, approximately 20-25 pages in length. In the paper, students are expected to evaluate, critique, test, and build upon a current debate of their choosing in the field of economics. Students should develop competing hypotheses, model them formally, and test them using quantitative methods. The papers are written as if they were being presented at a professional conference or submitted to a scholarly journal. The thesis is written in a series of steps, each of which is marked by the completion of a short paper or class presentation.
The senior thesis course is open to all ECON and IECO majors. It is a requirement for honors in IECO.
Honors in the Major
Students can earn Honors in the IECO Major by submitting a letter of intent during the junior year, writing a thesis based on original research taking IECO-401 during the senior year, the thesis judged as honors quality, earning a major GPA of at least 3.67, and earning a cumulative GPA of at least 3.5. In addition, students must successfully complete Honors Intermediate Microeconomics and Honors Intermediate Macroeconomics, or earn grades of A or A- in the regular sections of Intermediate Microeconomics and Intermediate Macroeconomics.
The major in International Economics is organized into three subfields.
Subfield A: International Economic Theory & Policy
This subfield is geared towards students who would like maximum exposure to economics, and is recommended to students who intend to study economics at the Ph.D. level.
Subfield B: International Finance & Commerce
This subfield is ideal for students interested in applying economics to business and finance, and is a good match with the International Business Diplomacy certificate.
Subfield C: Economic Growth, Transition & Development
This subfield is ideal for students interested in issues of economic development and transition, and matches well with area studies certificates.