DRAFT Syllabus
BSAD 295; CDAE 295, PA 295, RESNR 285:
The North American Free Trade Agreement: The View from the South.
A Field Course in Guadalajara, Mexico
PREREQUISITES: Introductory course in economics, Junior standing or Instructor
Permission
| Time, Place: |
3-4 meeting
times prior to departure, at times that fit in with student schedules,
Room TBA
May 21-June 4, 2005, Guadalajara, Mexico |
| Instructor: |
Joshua Farley |
| Offices: |
205H Morrill
Hall |
| Office hours: |
TBA |
| Telephone: |
656-2943 |
| E-mail: |
Joshua.farley@uvm.edu |
Course Summary
Course objectives
Topics to Be Covered
Resources
Course Requirements
Grading
Field projects (including
project steps)
Tentative schedule
Course summary
This course is a general introduction to free
trade agreements utilizing a case study of the North American Free
Trade Agreement between Canada, the US and Mexico. we will be
emphasizing the Mexican viewpoint. The course is centered around
a two week visit to Mexico's second largest city, Guadalajara. Faculty
from UVM are working with faculty at Universidad Panamericana (http://www.up.mx/), one of the leading
private universities in Mexico, to offer this program.
Free trade is a highly polarizing issue. Its
proponents argue that free trade increases economic freedom,
stimulating efficiency and growth in all participating countries, and
such growth is necessary to alleviate global poverty. As Mexico
grows wealthier, there will be less illegal immigration into the
US. Many proponents go on to claim that a healthy environment is
a luxury good, and people only begin to care about the environment
after their other needs are met. Economic growth will therefore provide
the resources and concern necessary to clean up the environment. In
other words, free trade is economically efficient, socially just and
ecologically sustainable.
In contrast, the opponents to globalization argue that free
trade does not necessarily lead to economic growth in all countries, and where
it does promote growth, the resulting gains are generally concentrated in the
hands of the few. Cheap Mexican manufactures, they argue, have contributed
to the 'great sucking sound' of American jobs moving south to Mexico, increasing
unemployment and lowering wages among blue-collar workers in the US and Canada.
Cheap American corn moving south into Mexico increases the poverty of Mexico's
small corn farmers-- already the poorest of the poor. Furthermore,
'free trade' agreements do not actually promote free trade but instead serve the
interests of large and powerful corporations, and weaken the ability of national
governments to address national problems. More international trade
means more transportation, accompanied by an inevitable increase in green house
gas emissions. In the competition for markets, countries engage
in a race to the bottom to lower environmental standards and wages and increase
their comparative advantage. In other words, opponents of free trade make
exactly the opposite claims of its proponents: 'free trade' as promoted by NAFTA
is economically inefficient, socially unjust and ecologically unsustainable.
This course will look at NAFTA and some of the
impacts of globalization from both
perspectives. We will review the theories of free trade, examine
the assumptions under which they hold true, and assess the extent to
which those assumptions hold true in NAFTA. We will look at
empirical outcomes concerning economic growth, income distribution and
environment. We will listen to the views of Mexicans, ranging
from wealthy CEOs, government officials and academics to indigenous
corn farmers and enviromental NGOs.
While in Mexico, students will be working on group projects focused
on a particular economic sector, and examining the triple bottom line of economic
efficiency, social justice and ecological sustainability. Faculty are currently
workingto develop the projects in collaboration with Mexican partners and stakeholders,
and will arrange for at least one Mexican student to participate in each project.
Prior to leaving for Mexico, students will be expected to complete a number of
assigned readings on free trade and NAFTA, a literature review for their projects,
and a complete project proposal. Completed projects will be due 2 weeks
after our return.
Problem-based couses are different from traditional
courses for
several reasons. While academics in universities study
disciplines, people in the real worldstudy problems. That is,
problems do not respect the artificial boundaries of disciplines, and
complex problems can rarely be understood from within the narrow
framework of a single discipline. In addition to the skills of
disciplinary analysis, this
course will focus on the skills of interdisciplinary synthesis, and the communication of research results
to
decision makers who can use them.
Course objectives:
Our overall objective for this course is to learn about different
theories of free trade and how they explain the empirical outcomes we see in the
North American Free Trade Agreement. We expect students to approach the
course with an open mind, listen to alternative points of view, and test what
they learn through their own empirical research in Mexico.
Specific objectives required to achieve this include:
1. Understand the different
theories of free trade.
2. Understand the structure of NAFTA, and the extent to which it
meets the assumptions of free trade theories.
3. Understand the impact of NAFTA on the democratic decision
making process, with a particular emphasis on Chapter 11.
4. Assess the empirical data on NAFTA in the light of competing
theories.
5. Apply a solid understanding of theory and empirical outcomes
to specific case studies in Guadalajara.
6. Develop more effective oral and written communication
skills.
Topics to Be Covered
In order to understand how NAFTA
works and the impacts it has on efficiency, distribution and
sustainability in Mexico, the US and Canada, we will need to cover the
following topics:
1. Ricardo's theory of comparative advantage, and the
assumptions under which it holds true.
2. The theory of absolute advantage, and the assumptions
under which it holds true.
3. The structure of the NAFTA agreement and the side
agreement on the environment.
4. The empirical outcomes from NAFTA, with an emphasis on
growth, distribution and environment.
5. The Mexican economy
6. The Mexican viewpoints: Business, Academia, Government,
Farmers and Civil society
Resources:
Workbook in applied
problem solving approaches to ecological economics
This is a draft of a forthcoming textbook by
Josh Farley, Jon Erickson and Herman Daly. It lays out an approach to
applied problem solving projects intended to help you set up a problem, analyze
it, synthesize the elements of your analysis into a more complete understanding
of the whole, then communicate your results to those who can act on the information.
It carefully outlines the steps to developing proposals for problem based
research.
Web Sites:
Course Requirements:
There will four mandatory class meetings
prior to departure: the first to introduce the course, the second (we hope)
for a presentation by a representative of the North American Agreement on Environmental
Cooperation (the NAFTA environmental side agreement), the third for students
to present their background research on the impacts of NAFTA in three specific
economic sectors adn overall, and the fourth for students to present their proposals
for research to be conducted in Mexico. A number of mandatory readings will
also be assigned. Students will be responsible for initiating their research
under the guidance of the professors, but our approach will be more 'guide by
the side' than 'sage on the stage.' We will stress communication skills,
and there will be at least 2 presentations required. The final presentation
will take place in either Mexico or Vermont based on the project undertaken.
We expect our project partners to be in the audience. It must be a professional
quality presentation. The trip to Mexico is not a vacation: We will devote
at least 8 hours per day to lectures and projects. You will be free to
enjoy the city on evenings and weekends, on the condition that you are fully
alert during course time. There will also be a weekend trip to the beach resort
town of Manzanillo.
Required readings (tentative):
Daly and Farley, Ecological Economics: Principles and Applications.
Washington, DC. : Island Press. 2003
Part V: International Trade
Chapter 17: International Trade
Chapter 18: Globalization
Chapter 19: International Flows and Macroeconomic Policy
Taylor and Moosa, Macroeconomics 2
Part 4: Economic Development and Interational Trade
Chapter 19. Economic development
Chapter 20. The gains from
international trade
Chapter 21. International trade policy
Excerpts from
In Defense of
Globalization and
Free Trade
Today by Jagdish Bhagwati
Jagdish N. Bhagwati,
Arvind
Panagariya
Financial Times,
July 13, 2003
Selections from Paul Samuelson's recent work
Selections from William Baumol's recent work
Tentative Grading Scheme:
The bulk of your grade will be
determined by your course project
Class Participation: 25%
Project proposals: 20%
Final Project:
30%
Presentations:
25%
Field Projects (UNDER CONSTRUCTION!)
We are currently working to develop projects on three economic sectors of particular
importance to NAFTA and other global trade agreements. At this time, we expect
the sectors will include:
1) Textiles (manufacturing): For many
years, the United States has maintained a quota system on textile imports,
limiting the quantity that could be imported from individual countries.
For many years, Mexico and other countries were opposed to this quota. However,
as China has surged as an exporter of low cost textiles, other countries
have enjoyed the quota, as it has protected their export market against
China. The textile quota however officially came to an end on January 1,
2005. What impact will this have on Mexico? What impact will it have on
the US textile industry?
We are trying to develop a project in collaboration with Cabot Hosiery Mills
Inc., a manufacturer for leading brands of socks located in Northfield,
Vermont. A family owned business, Cabot has attempted to ward off
the outsourcing of manufacturing jobs in their plant through improvements
in efficiency in their manufacturing process and offering a high level of
expertise in product design. Students will examine the strategy at Cabot
Hoisery Mills as well as the textile market in Mexico. Students will
develop a range of recommendations for senior management at Cabot upon return
to Vermont.
2) Agriculture: Agriculture is a highly
divisive issue in international trade. The US, Europe and the other wealthy
nations offer enormous subsidies to the agricultural sector, making it very
difficult for less wealthy nations to compete. As an example, some cotton
farmers in the US receive annual subsidies of up to $106 million per year,
and the US sells cotton on the global market for 41% of its production cost.
Corn is also heavily subsidized, and corn exports from teh US to Mexico
have soared under NAFTA. Wholesale corn prices have decreased in Mexico,
making it much harder for corn farmers to make a living. While it might
seem that lower corn prices would benefit poor Mexicans, the retail price
of corn meal and tortillas, staple foods in Mexico, have perversely risen.
Corn farmers in Mexico are already the poorest of the poor, and may be further
impoverished by NAFTA. In addition, farmers in the US primarily grow a limited
number of hybrid corn varieties, while farmers in Mexico growh hundreds
if not thousands of ancestral varieties. As farmers in Mexico are forced
out of farming, there is a real danger of losing genetic diversity accumulated
over thousands of years. The rate of extinction of agricultural plants and
animals far exceeds that of any category of wild species. To complicate
matters more, Mexico has a ban on growing genetically modified corn, but
it appears that imported corn is being planted. Many people are concerned
that this GMO corn will contaminate ancestral varieties. Finally, agricultural
production in the US is generally uses more fossil fuels and chemicals than
production in Mexico, which may have adverse environmental impacts in the
US. We will be consulting with our Mexican partners to decide which crop
is most relevant to the Guadalajara area (one of the major crops near Guadalajara
is the Agave cactus, used to make tequila, but the US certainly does not
compete with Mexico in this area!).
3) Information: Our economy is increasingly
driven by information technology, and intellectual property rights have
played a very important role in global trade agreements. Information is
entirely different than most other 'commodities', as it does not wear out
through use but rather improves. Guadalajara boasts a well developed information
technology sector. We are working with our partners to develop a case study
of this sector.
Tentative Schedule (times will be changed if not
compatible with student schedules)
Problem solving courses are by their nature flexible. We may
change this schedule significantly as the course proceeds. Currently we
expect to meet about 4 times before leaving for Mexico for about
1.5
hours each time. We will leave for Mexico shortly after the Spring
semester ends.
April 14:
Lecture topics: Introduction to course and course projects
Readings:
Assignment: Choose project
April 21:
NAFTA and the Environment
Readings:
Assignments:
1. Empirical data on the impacts of
NAFTA should be quite straightforward,
but unfortunatley the data is subject to highly ideological
interpretations in the popular press. Ideology is more or less a view
of the world held by an individual and used to interpret facts
and
observations. Much of it is based on moral principles about which
perfectly reasonable people might disagree. But ideology should
work
hand in hand with science. Scientists observe nature, formulate
hypotheses to explain what they observe, then test these hypotheses
through experiments and further observations. If these experiments and
observations refute the hypotheses, the scientist rejects them and
develops new ones. If the empirical data supports the hypotheses,
then
over time they become theories, which are still subject to the same
empirical tests. An ideologue is one who refuses to test his/her
hypotheses and theories, or disregards the evidence when the tests
refute the hypotheses. There are of course different ways of
interpreting the same set of facts.
5 teams of students will research the popular media for articles on
NAFTA. Each team will concentrate on a particular source of
information, and present what they find. The sources we will use
include:
The Nation
The New York Times
The Christian Science Monitor
Time Magazine
The Wall Street Journal
Students will present the results of their research in week 3.
Our goal is to understand the actual impacts of NAFTA, and how these
impacts can be interpreted based on people's underlying ideological
assumptions.
2. Initiate literature review for projects
April 28:
Student presentations on NAFTA
Assignment: Finish literature review and integrate into statement
of problem
May 15:
Student presentations on field projects
Assignment: Finish and turn in project proposal: Statement of
problem; Goals and Objectives; Methodology.
week 1 in Mexico:
2 Morning lectures followed by field
research in the afternoon
Lecture topics may include the following:
The Classical theory of free trade and
the origins of NAFTA
The Ecological Economics of Free Trade: Impacts on distribution and the
environment
The Enviromental Kuznets curve
Latin American Economic History
Financial contagion: The Tequila Crisis
Mexican perspectives: Large corporations
Mexican perspectives: Small businesses
Mexican perspectives: Small corn farmers
Mexican perspectives: Environmentalists
The Mexican Economy
Weekend trip to a Pacific coastal
community.
week 2 in Mexico:
Lecture topics may include the following
Beyond NAFTA: The FTAA and the WTO
LOIS(local ownership import substitution) vs. TINA (there is no
alternative)
Research projects
Final presentations