international trade

International Trade Assignment 2 Page 1

INTERNATIONAL TRADE

(ECON 1086- RMIT, Australia)

(ECON 1269- RMIT, Vietnam)

(ECON 1089- SIM, Singapore)

ASSIGNMENT 2

THE DUE DATE IS FRIDAY WEEK 8 (September 20) AT MIDNIGHT.

Instructions for submission:

1. Click on Assignments on Canvas. 2. Click on Assignment 2. 3. On the right-hand corner, click on Submit Assignment. 4. Attach your file by clicking on Choose File. 5. Once you selected your file containing your assignment, click on

Submit Assignment at the bottom.

To answer the assignment questions first get the data follow these steps.

1. This assignment requires you to obtain data from two (2) countries of your choosing over the period 1985-2005.

2. Obtain country-level data on trade (% GDP) and GDP per capita (constant 2010 US$) from the World Bank’s World Development Indicators

(http://databank.worldbank.org/data/source/world-development-indicators).

3. Obtain data on industrial pay inequality difference from UTIP-UNIDO (http://utip.gov.utexas.edu/data.html).

4. Merge the data using Excel. It is up to you to figure out how to do this! 5. The data does not need to be for the same countries as in Assignment 1. It is up to

you what countries you use.

6. DO NOT attach Excel files to the assignment. 7. Keep explanations brief. Policy analysis in applied economics has to be brief. Be

precise and to the point, avoid jargon.

International Trade Assignment 2 Page 2

Assignment 2 (25% of your final grade)

Check CANVAS for due dates.

*** Follow the instructions above on how to get the data.

*** See Chapter 6 and/or Lecture 6 notes for references.

1. Using data from two countries, plot openness versus Industrial Pay Inequality (from UTIP-UNIDO) for each nation. Use two graphs, one for each country.

IT’S UP TO YOU TO FIGURE OUT HOW TO DO THIS. (8 marks)

2. Using data from the two countries, calculate the correlation (using excel) between openness and Industrial Pay Inequality (from UTIP-UNIDO) for each nation,

respectively. Report and interpret this relationship in approximately 300 words.

[Hint: The Theil Index is used as a proxy for the ratio of skilled to unskilled

wages in empirical studies]. DO NOT ATTACH YOUR DATA TO THE

ASSIGNMENT. (7 marks)

3. Explain carefully in approximately 500 words whether your data agrees or disagrees with the Stolper-Samuelson Theorem. (Remember to accurately define

the theorem and discuss how it applies to your countries). (10 marks).