Chapter 8: Globalisation

Question 1

Define International Trade

Answer 1

Exchange of G&S across national boundaries

Question 2

Define CA

Answer 2

Produce the good at a lower OC than another country

Question 3

Law of CA

Answer 3

Trade can benefit all countries if each country were to specialise in producing the goods in which they have a CA in and exchange some of the goods in which they have a CD in

Question 4

Illustration of S&T

Answer 4

6 Assumptions
Table
Explanation

Question 5

TOT Definition

Answer 5

Rate at which one unit of a good can be exchanged for another
Trade will be beneficial if TOT lies between OC

Question 6

Sources of CA

Answer 6

Static CA (Natural resources, Human resources, Capital stock, Technological capabilities)
Dynamic CA (Capital, Skills, Tech)

Question 7

Limitations of CA Theory

Answer 7

Increasing OC
Factor Immobility
Transport Costs
Protectionism
Strategic Reasons

Question 8

Patterns of Trade

Answer 8

Commodity and Geographical composition of trade

Question 9

Economic Reasons for SG POT

Answer 9

Inter-industry - Small developed economy, stong technological base and highly skilled workforce, etc
Intra - Differences in T&P and Gains from internal economies of scale
Others - Globalisation&FTA, Protectionism, Transport Costs

Question 10

Benefits of Trade

Answer 10

Higher consumption possibilities
Wider consumer choice and greater product variety
Lower prices for domestic consumers
Trade as an engine of growth
Technological transfer

Question 11

Costs of Trade

Answer 11

Unfair Competition and Dumping
Over-reliance on Foreign countries (Susceptible to externally-induced cyclical unemployment and imported inflation)
Structural Unemployment
Worsening BOT
Widening Income Disparities within a country
Environmental degradation / Pollution

Question 12

Define Protectionism

Answer 12

Measures that restrict the movement of G&S between countries, sheltering domestic industries from foreign competition

Question 13

Tools of Protectionism

Answer 13

Tariffs
Quotas
Explain what they are:
VER 
Currency Manipulation
Administrative Measures
Subsidies to domestic producers

Question 14

Tariffs

Answer 14

Graph
Explanation
Implications on efficiency
Macroeconomic Impact
Limitations (2) and Unintended Consequences

Question 15

Quotas

Answer 15

Graph and explanation

Question 16

Reasons for Protectionism and CAs

Answer 16

Infant Industries
Unfair Trade Practices
Trade Imbalances and Unemployment
Declining Industries

Protection of Strategic Industries / Against bads/ Achieve political objectives

Question 17

Define Economic Integration

Answer 17

Process whereby neighbouring countries integrate as one economic unit to take advantage of extended market and bring about better allocation of resources

Question 18

Types of Economic Integration

Answer 18

FTAs (Define, SG)
Customs Union
Common Market

Question 19

Trade Creation and Diversion

Answer 19

Define, table, explanation

Question 20

Define globalisation

Answer 20

Integration or inter-connectedness of national economies through trade of G&S, FDI, capital flows, spread of technology, labour migration

Question 21

Features of Globalisation

Answer 21

Openness to Trade (Engine of growth, Trade Liberalisation, Outsourcing)
Openness to International Capital Mobility (Offshoring, International Supply Chain, Financial Flows)
Openness to International Labour Mobility

Question 22

Economic factors affecting G

Answer 22

CA, Engine of Growth, Proliferation of Free Trade Groupings, Economic Crises

Question 23

Technological factors affecting G

Answer 23

Distance and high transport costs
ICT
Tech advances

Question 24

Political factors affecting G

Answer 24

Communism fall
China
Trade barriers for votes tm

Question 25

Benefits of G

Answer 25

Access to Raw materials and Inputs FDI Foreign technology Foreign labour

Question 26

Costs of G

Answer 26

``` Economic Instability Brain Drain Structural Unemployment and Income Inequality Social Costs of Increased Immigration Environmental Degradation ```

Question 27

Globalisation and SG's POT

Answer 27

Impact on Commodity and Geographical Composition

Question 28

Policies to enhance SG X and as a destination of FDI

Answer 28

SSP to lower Px, improve X quality, attract FDI, promote exports/FDI and accessibility to M

Question 29

Policies to mitigate negative effects of G and Rise of Deglobalisation

Answer 29

SSP to reduce economic instability and build resiliency, prevent structural unemployment and reduce income inequality, manage labour movements