IIMA - Course Catalogue
Global Finance and Trade
Prof. Sanket Mohapatra
Course Description & Objectives
This course aims to provide an understanding of global finance and trade from a managerial perspective. In recent decades, the global economy has experienced significant integration through international financial flows and trade. Corporations in emerging market economies have experienced the benefits of globalization, through better access to global markets for their products and increased inflows of foreign investment as well as outward investment. However, global integration has also increased the vulnerability of firms to events outside their own borders, for example, through spillover effects of advanced economies’ monetary policies and “trade wars” among the major G20 countries on developing countries’ exports and exchange rates.
The first part of the course will start with an overview of the evolution of the global monetary and financial system and international institutions. It will then discuss foreign exchange markets, the structure and actors in these markets, interest parity conditions, and determination of exchange rates both in the short-run and long-run. The cross-border effects of monetary policies, implications of the choice of exchange regime, capital controls, foreign exchange interventions, and currency crisis will be discussed next. This part will also explore the instruments available to firms for hedging exchange rate risk (forwards, futures, options and swaps), international capital-raising by corporations, and the risks and opportunities of investing in emerging markets.
The second part will cover questions such as why countries trade, arguments for “free trade” versus protectionism, an overview of classical and new theories of trade, and a discussion of increasing returns and firm heterogeneity in international trade. This part will examine tariffs and quotas, integration of global supply chains, implications of automation for international trade, trade and inequality, trade disputes and trade negotiations, and the role of the World Trade Organization (WTO) and preferential bilateral and regional agreements in international trade.
Course participants would gain an understanding of globalization, policy choices and trade-offs in open economies, functioning of international markets for finance and trade, and the opportunities and risks of cross-border trade and investment. The course will emphasize the use of analytical tools, cases, and research to better equip future managers in interpreting and responding to global financial and trade events.
The course will rely on theory, analytical tools, and selected Cases to illustrate real-life scenarios that are relevant for managers operating across economies open to global finance and trade. The readings and Cases would be updated over time to reflect the evolving global economic environment.
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