topic 1 the global economy Flashcards

Question

difference betwee growth of global finance and global investment

Answer 1

FINANCE : shorter term, **speculative shifts of money** INVESTMENTS: longer term **flows of money to buy/establish bus**

Answer 2

* **movements** of **funds directly invested** in **eco activity/purchasing companies** movement of funds betw ecos to **establish new** company**/buy large prop shares** in **existing** company **(≥10%)** * FDI **LT investment**, **investor **intends **management role** of bus

Answer 3

purchase financial assets (stocks, bonds, other securities) to generate returns through dividends, interest, or capital gains. * Unlike FDI buy smaller stakes that do not result in managerial control. * aim for diversification, invest in a variety of assets to reduce risk * primary goal is financial return, appreciation in the value of the assets

Answer 4

* **reforms developed+ing countries surge flows 1980s onwards** * **storngly influenced** by lvl **eco activity** * **uncertain** **eco conditions** & greater ***geopolitical*** uncertainty **reduced growth of global** FDI **recently**

Answer 5

**greater industrial capacity** & larger **consumer markets** make Europe, NA destination for **foreign investment during globalisation 90s-most 2000s** * **share of FDI for developing ecos exceeding developed since 2020** * **most FDI inflows to developing c's flow to asia** due to **stronger returns** on FDI **relative to** returns **investing in developed** countries

Answer 6

80% global trade * **expand prod facilities** --> bring **foreign investment, new tech, skills & knowledge** **(capital & job opps) --> gvts encourage** em in **own c** through **supportive policies (Subsidies, tax concessions)** *** early 90s** * ^ **international mergers & takeovers form companies** worth hundreds of billions and reduce global companies in diff product markets but **falling bc weaker eco conditions & low investor confidence**

Answer 7

domestic sources * FDI <20% total investment bc most within national ecos

Answer 8

* increase volume & significance, ^ **cross-border cartels betw large corps** --> **reduce comp** in ecos and **harms local consumers**

Answer 9

ALLOWS **INTEGRATION** * ecos **adapt** to **new tech rapidly more closely integrated** with other ecos Driver of **growth in TRADE & investment** * major **trade opp for tech innovators & exporters (trade spreads new tech)** * other c's **import tech to develop own tech exports** ^ **FOREIGN INVESTMENT** **corps developing new tech mvoe** **to overseas markets** to **sell g&s to local buyers directly** * corps invest in c's they enter esp edu & training **INTERNET** * **internet links** **ind, bus, nations for greater comm w/n & betw firms, reduce costs as barrier to integration** betw ecos.

Answer 10

* developments in **freight tech** eg. micro warehouses near customers to improve **logistics** * **cheaper, reliable int. communication** via **high-speed braodband** for **commercial services** for **customers around world** * **secure, high speed networks for money** to **move quicker --> foreign investment** * **smartphones & internet access changes structure of industries (retail, transport, edu)** * advs in **transport** eg. high speed rail networks for **labour mobility betw ecos** & ^ access to **tourism** for consumers

Answer 11

* **LMs diff from product markets & FMs bc less internationalised** (money move almost instantly, g&s move in days, investments made in weeks) bc **ppl can't move jobs as freely** & **recent yrs more restrictive abt immigration** from **poorer c'**s * still **more ppl** than before **moving to diff countries** to take adv of **better work opp** **offered** by **other c's**

Answer 12

* **highl skilled workers** **attracted** to **larger, higher income ecos** (eu, us greatest **inflow migrant workers** more opp & pay available) * **services sector** hires **more migrants** * **low skilled labour high demand** in **adv eco difficult** to **attract locals** (no language)

Answer 13

how **tasks in PP allocated to diff ppl** in **diff countries** around world * **diff c's specialise prod particular g&s** based on their **comparative advantage**. * ppl **move to jobs where skills needed** while **globalisation of LM increasting but sig barriers** to **working in other C's eg. immigration restrictions, language**

Answer 14

**international division of labour**. * **immigration restrictions, language** * many prefer **staying** where **familiar** with ***culture, languge, family***

Answer 15

* **prop** of migrants highly skilled **outnumbers** low skilled most c's * **net loss of skilled workers** who attracted to **emigrate** to other c's (job opps, rewards) * **high lvls skilled labour emigration ^** gap betw developed&ing ecos (development, welafre) as **human capital flow** towards more adv ecos & source c **shortages of skilled** workers * ecos exp **outwards igration** benefit from **remittance inflows, interconnected bus networks & shared tech developments** * usually smaller c's w/ lower pop

Answer 16

* create **online communities, social media platforms connect individuals** * central to **marketing consumer g&s**, * **firms** use **prof networks** eg. LinkedIn to **source**b est **talent from global LM**

Answer 17

* **shift prod betw ecos** to **search most cost-effective labour** * **producers** **operate** "**GLOBAL SUPPLY CHAIN**" w/ **prod** in **several c's 'OFFSHORING'** allows shift prod **betw countries to reduce costs**

Answer 18

theory "**ecos should specialise in prod of g&S** they **can produce at lowest opp cost**" * **developing ecos** have **large pop** of **workers** only **basic labour skils & edu lvls** give **C.A. in labour-intensive manufacturing** * **adv ecos** **shifted** **away** from this to **specialised services** using **highly skilled workers, greater supply** in adv ecos.

Answer 19

flucatuations in lvl **eco growth** due to **dom/international factors**\ * caused by **lvl of AS and AD**

Answer 20

**total market value all g&s prod in eco over PIT** * ecos usually exp **overall growth trends output**

Answer 21

fluctuations in lvl eco activity in global eco over time synchronised fluctuations in lvl eco activity across c's due to int. trade, GFMs, geopolitical tensions * synchronised BCs diff c's exp similar eco fluctations lvl eco activity same time (trade & financial integration) **sustaining steady rate of growth yearly**, **most ecos** periods **above avg growth -->** periods **below avg** * eco growth **stronger when rest world growing strongly**, weaker when rest downturn

Answer 22

AUS **small open eco --> esp affected by eco overseas eco grwoth rates** **domestic factors** have **1/2**as much **influence** as **international factors** on **eco grwoth every yr** (60% changes in **lvl output** **from** changes in **IRs, growth lvls, inflation in G7 largest industrialised c's**)

Answer 23

1. **trade flows** * **boom/recession 1 c affects demand for g&S in other c's** * growth in eco flow on effects on **trading partners** growth 2. **investment flows** * eco conditions affect if **bus invest in operations in other c's --> eco growth** 3. **transnational corps** * global up/downturns **spread** throughout **global eco** 4. **FM and confidence** * **consumer** condience, **investors** influenced by **conditions other c's** * strong correlation betw **movements in share prices** 5. **global IR lvls** * **MP** conditions in ind ecos strongly influenced by **IR changes in other countries** (central banks) * **higher eco growth, ^ IR overseas, pressure on other ecos follow** 6. **commodity prices** * **energy, minerals, agri** set by **global markets (price)** --. influence lvl **inflation, investment, employment, growth**

Answer 24

^ protection, capital controls, foreign invstment restrictions weaken impact but less integrated eco reduce eco grwoth (cant access global investment capital, cheaper goods via trade, CA) 1. **IRs** * sig impact on **eco activity**, * higher IRs dampen eco activity, lower IRs stimulate 2. **GVT eco policy decisions** * **FPs** sig eco growth in **S-MT** * **if C1 ^tax while C2 vtax, eco growth move in opp directions** 3. **EXCHANGE RATES** * impact **lvl ****trade competitiveness & confidence** w/n ecos --> influence eco growth 4. s**tructural factors** * c's diff lvls **resilient Financial systems**, diff lvls **innovation, new tech, cons & save behaviour, training & edu emp, bus regulation** * influence **competitiveness & growth**

Answer 25

fluctuations in lvl eco activity in **geographical region of global eco** over time * regions w/ **higher prop developing/low income c's less regionally integrated** * RBC **dominated** by most **globalised, largest ecos** * **smaller** ecos affect **perf** of regional ecos **indirectly** * **some regions** perf stronger than others and **fluctuate more indepdendently**, however **RBC** result **from ^ cross-border integration** * since AUS trades extensively w/ asian ecos, its BC influenced by asian RBC

Answer 26

**strengthen** * trade flows * investment flows & **investor sentiment** * TNCs * financial flows * tech * **global IRs** * **commodity prices** * **international orgs** **weaken** * **domestic IRs** * **gvt fiscal policies** * **exchange rates** * **structural** factors * **regional** factors

Answer 27

eco principle that **nations** should **specialise** (**produce and export**) goods w/ **lowest opp cost** & **trade** (**import** goods that **other c's can produce more efficiently**) w/ nations to **maximise both nations' SOL** * eg. AUS **lower OC** producing iron ore than China (**to produce extra tonne of iron ore, AUS gives up producing smaller quantity smartphones than China**) AUS would have **comparative adv in iron ore production**

Answer 28

rising! (although **broad trend recent decades** towards **more free trade in global eco**) **world experienced LT trend towards greater free trade in global eco**

Answer 29

**gvts** impose **no artificial barriers to trade restricting free exchange of g&s betw countries** to **shield domestic producers from foreign competitors**

Answer 30

* allow countries to **obtain g&s they cant produce themselves**/ **sufficient quantities** to **satisfy domestic demand** **(lack adequate resource**s eg. tech to produce manuf goods) * countries can **specialise** in **production** of g&s **comparative adv** for **better resource allocation** --> **ecos of scale** **lower avg costs** of prod while ^ **productivity** & **^ production** w/n countries & throughout **world** * ^ **international competitiveness** as **domestic bus** face greater **competitive pressures from foreign producers, gvts encourage domestic industrial efficiency** * **encourages innovation** & **spread of new tech** & **PPs** throughout world * **higher LS** from **lower prices, ^ prod** g&S & **^consumer choice** as **countries access goods that lack of natural resources** would've **prevented** * **open global markets** --> ^ export opps & expand output --> ^ rates **eco growth** & **^real incomes)** --> **multiplier effect** when ^ export income bc export industries hire more workers who spend income other industries --> ^output & emp... *

Answer 31

**S<** effects on **macroeco** 1. **consumers limited choice, pay more for g&s** * for **quantity, quality, type** product **otherwise available** **w/o** * prot. policies to **safeguard industries** & **jobs** --> consumers settle for **poor quality & pay more for limited quantity** --> **^ inflation --> pay/purchase less of product/not --> hurt dom firms financially, needs prod costs to pass** 2. **TRADE WAR AMONG NATIONS** * Nations take **reciprocal action,** **retaliate even if political & military allies** --> **consumers** of c's **^ costs & limited choice** --> **^import costs (producers pay mroe for equip, commodities, intermediate goods from foreign markets) --> real GDP growth**

Answer 32

1. ^ **unemployment** as some **domestic bus** find it hard to **compete w/ imports** * **ST rise** u/e **corrected in LT** as domestic eco **redirects resources to areas of prod w/ comparative adv** 2. some **industries, workers, regions neg** aff **LT** more **diff for less adv ecos** to **est new industries** if **not protected from larger foreign competitors** 3. **prod**uction **surplus**es from **some c's** may be **Dumped (company exporting a product to a foreign market at a price lower than normal value, below the cost of production/price it charges in its home marke to gain comp adve in the foreign market, drive out competitors, build market share.)** on **domestic market, hurt efficient domestic industries** 4. encourage **enviro irresponsible prod methods** bc **producers** in some nations may **win markets by undercutting comp' prices bc** they also **undercut enviro standards** 5. C's persistent trade deficits --> ^reliance overseas borrowing/foreign investmnet --> foreign investors lose confidence 6. national security undermined if supply chains disrupted during war/pandemic, cant source defence equip/vaccines

Answer 33

gvt **policies** give **domestic producers artificial adv over foreign competitors** DIED

Answer 34

* **new** industries face many **risks & difficulties early yrs**, **start small scale** w/ **costs** relatively **>** est **competitors** in **other c's** * shield from competitors in **short run** to **build capacity, establish markets**, achieve **ecos of scale** to compete in **global eco** * esp for **emerging ecos recent decades** w/ developing new industries * **gvts** should provide **direct temporary assistance only** for industries **likely** to **achieve** some **comparative advantage in LT** to compete in **global eco** * used to **support** many industries **would've never survived, reluctant** to accept bus seeking protection using this argument

Answer 35

* **whether industry protection removed over time**: if **protectionist policies not removed, no real incentive for industry to reach lvl efficiency** that would enable it **to compete w/o** protection * **gvts temporary assistance only** to industries **likely achieve some comparative adv** in **LT** to **compete in global eco**

Answer 36

**exporting** goods to country at **lower price than selling** price in **country of origin** * **foreign firms** try to **sell** their **goods in another country's market** at **unrealistically low prices (below price in home country market) too eliminate comp in foreign c** * **usually temporary** but **harm domestic producers normally compete w/foreign firms forced out of bus** and **lose productive capacity of eco& higher u/e** * to **gain market share** in a **foreign market, drive out local competitors**, or **dispose** of **surplus production**. * **harm** the **importing country's industries** by **undercutting domestic producers**

Answer 37

* using protectionist methods **(restrictions on imports)** to prevent dumping **only reason for protection widely accepted** * recently **WTO question** whether countries may **unfairly accuse efficient low cost foreign producers of dumping & abusing 'anti-dumping' processes to protect domestic industries**

Answer 38

* only gain is results in **lower prices for consumers** in **ST** but **doesn't last** bc **foreign producers ^ prices once local comp eliminated**

Answer 39

* if **local producers protected** from **competition** w/ **cheaper foreign imports, ^ demand for local goods** --> create more domestic **employment** * but during **recession** when **^ u/e, more bc tech & automation** than trade contributing to **job losses** * but protection would distort allocation of resources away from areas more eff production to less eff --> LT ^ u/e and lower eco grwoth * phasing out protection better, lasting jobs in other sectors internationally competitive * if c protects industries others can **retaliate** and adopt dimilar policies --> **employment in less eff protected indutries** but **lower emp in more eff export industries**

Answer 40

* **retain** own **defence industries** so during **conflict able to produce equi** needed for **national security** * countries eg. US **don't buy** crucial **defence equipment from overseas** countries, **concern Chinese telecommunications networks monitored by gvt despite being cheaper, more adv** than competitors * ***shortages*** of **emergency medical supplies** during pandemic, **1/2 medical supplies manuf in China** who **prioritised domestic needs** and others unable to obtain quickly enough **compound spread** * **vaccine shortages globalisation made many ecos too reliant on fragile global supply chains** (**despite** fact **made them available globally)** * must accept loer LS than if specialised CA & free trade

Answer 41

* **global supply chains** create **vulnerabilities for countries w/ limited manuf capacity** eg. **AUS (*arnotts couldn't make tim tams cause china didn't have plastic biscuit trays even though they're manuf locally)*** * debate betw **global supply chains vs self-sufficiency** on how nations respond to globalisation * implementing **protectionist policies** must **accept higher costs** involved **producing goods locally compared to sourcing from countries w/ comparative adv** in producing them

Answer 42

* **non-eco** reasons eg. **aus restricts uranium exports** to reduce **risk** used to **produce nuclear weapons** * normally impose **trade restrictions on imports to prevent goods from overseas sold in their country**

Answer 43

* **gvt eco policies & measures to restrict amt foreign g&S entering domestic market** * **protect local bus, indus, jobs from int. comp by making foreign products mroe expensive/less accessible**

Answer 44

* **wage differentials** betw **higher & lower income ecos, producers 'should be' protected from comp** w/ c's that produce goods w/ **low cost labour** bc **developing ecos, weak labour standards** eg. **restrict worker rights to form unions**, low **safety** standards * growing awareness of **modern slavery in global supply chains, gvts prohibit trade** of goods **produced using forced labour** eg. prison workers, **child** labour - **prevent human rights abuse** despite protectionist consequences * enviro factors eg. **enviro harm in prod some goods** - **overseas producers** produce **cheaply bc** **don't have to comply w/ strict enviro standards in adv ecos**

Answer 45

* shift from **traditional** protectionist measures **(tariffs, subsidies)** **towards less visible** ones eg. **subsidies,, tax concessions, LCRs, administrative barriers & industry assistance plans**

Answer 46

**taxes on imported goods to protect aus industries** * **gvt** imposed tax on imports, **raises price** of imported goods so **domestic producer more competitive** --> **(Domestic) demand contracts, supply expands, imports fall** * no tariff = free trade

Answer 47

1. **domestic producers supply greater quantity** of goods, **stimulates domestic production & employment** 2. more **domestic resources attracted to protected industry** --> **reallocate resources towards less eff producers** who **unable to compete** on equal footing **w/ foreign producers** 3. consumers pay **higher price** and receive **fewer goods**, **redistributing income away from consumers & foreign firms to dom firms & gvt --> lower consumption & output** 4. **Raise gvt revenue** but **not primary obj**ective, more successful as protectionist device (restricts more imports) raise less revenue 5. **retaliation effect** may occur * **countries** can **respond** to tariffs on imports by **imposing tariffs on goods exported to them** * **^ prod & employment gains for import-competing industries offset by losses by eco's export industries** | 1.

Answer 48

**restrict**ions on **quantities** of various **goods thatcan be imported** * controls **volume** of goods **allowed to be imported** over given **PIT** * **guarantees domestic producers** a **share of the market** * **raise price of import**ed goods, **expand domestic supply**

Answer 49

both used in **international trade policy** to **regulate flow of imports** QUOTA * **direct limit** on quantity of a good that **can be imported/exported in PIT** * Once **quota** **reached**, **no additional units** of good **can be imported until the quota period resets.** * restrict the supply of goods --> scarcity --> **^ price**. * **dont generate gvt revenue** but **benefit domestic producers by limiting foreign competition** TARIFFS * **tax/duty** imposed on imports, usually as **% of good's value/ fee per unit**. * make **imports** more **expensive**, --> **price advantage to domestic goods** * generate **gvt revenue** * can be **adjusted flexibly (e.g., raised or lowered),** whereas **quotas** are **rigid limits**

Answer 50

**protectionist method** where **quantity goods imported up to quota levied at standard tariff rate** whereas additional goods **imported above quota limit pay higher tariff rate** * common in **agricultural trade,** where countries want to **protect** their **farmers** while ensuring **some foreign products enter the market at competitive prices** * **AUS highly protected industries (textiles, footwear, motor vehicles)**

Answer 51

* **domestic produers supply greater quantity** of good, stimulates **domestic production & employment** in **protected industry** * **resources** in eco **attracted to protected industry**--> **reallocate resources** from other sectors where **prod & employment fall** * consumers pay **higher price** and receive **Fewer goods**, **redistribute income** away from consumers to **dom producers in protected industry** --> lower lvls eco growth * unlike tariffs **Dont directly generate revenue for gvt** but can sometimes **raise small amt revenue** by administering quoate by **selling import licences, allow firms to import limited no. goods** * like tariffs **invite retailiation** **from country whose exports reduced --> lower exports for country initiated import quota**

Answer 52

**gvt financial assistance/cash payments to bus** to **encourage production** of g/s & influence **allocation resources** in eco, can be tax concessions/cheap loans than direct payments * **financial assistance for dom producers, reduce selling price** and **compete easily w/ imported goods** * **lower market price** rightward shift of supply, **^ quantity produced,** * **lower production costs for dom firms**, --> **lower prices,** --> **more competitive dom & globally** --> **discourages** consumers from **purchasing imports,**--> **protect** **domestic industries from foreign competition** * RENT SEEKING BEHAVIOUR --> firms try ^ welath w/o contributing wealth society by lobbying gvt, resources to unproductive activity to maintain/^ protection than invest for output/efficiency

Answer 53

* more **rsources** in eco **attracted to protected industry**--> **reallocates resources** **from other sector**s of eco where **prod & employment fall**s, --> **domestic producers supply greater quantity** of goods, stimulates **Domestic production & employment** in **protected industry** * consumers pay **lower price ** and receive **mroe goods** bc subsidy shifts supply curve for sector to right but **consumers** still **indirectly pay for subsidies through higher taxes** * **direct costs on gvt budgets** bc **gvt payments to producers** of g&s --> ** fewer resources to allocate** for other priorities **(edu, healthcare)** * many prefer **subsidy > tariff bc subsidies abolished quicker** since they impose **costs on the budget than generate revenue**

Answer 54

* **industry regulations & gvt procurement policies** * goods must **contain min % of domestically sourced labour, materials or parts to be sold in c** * **imported components may not attract tariff if certain % of good locally made**

Answer 55

programs give **domestic producers assistance (grants, loans**, **technical advice eg. marketing/legal info**) & **encourage bus to penetrate global markets/expand existing overseas market share** * **popularity** grown considerably recently bc **nations** moved greater **focus** to c**apture foreign markets > protecting import-competing bus** as strat to **achieve higher rates eco growth & emp**loyment * **don't protect bus**inesses **from foreign comp in dom market** but still **artificial barrier to trade** * eg. grants for expenses entering int markets (AUS EMDG), concessional loans mroe favourable terms than market lenders

Answer 56

* **higher prices for ocnsumers + disrupt global supply chains ^ input costs bc fewer imports --> domestic prod less comp --> ^ prices** * **trade wars as other c's, trading partners retaliate & respond by impose own restrictions --> reduce access to export markets & hurt industries rely on int. trade** - over **medium term,** countries that **raise tariffs** experience **lower output, weaker productivity, increase u/e & increased inequality by shielding ineff producers --> reduce global eco grwoth, lower LS** * more **diff** for ind ecos to **specialise** in **production** where **most efficient** * **negative eco impact of protectionsit policies larger relative to size** of ecos for **developing ecos**, **excluded** from **access to markets of adv ecos, most benefits of global trade liberalisation to developing countries** DOM ECO: LT lower output, emp, income, consumer choice --> LS, misallocate resources, prices * weaker fiscal position (lower eco grwoth & incomes + ^expenditure industry assistance --> lower tax rev) * lower productivity grwoth --> eco grwoth bc less int comp --> lack incentive to innovate, use outdated tech & work practices GLOBAL ECO lower GWP, LS, producitvity grwoth, ^u/e & prices from shielding ineff producers

Answer 57

**group of c's join together & agree** in **formal preferential TA to the exclusion of other countries** * to **reduce/eliminate trade barriers betw themselves** * **>1/2 int. trade** covered by RTAs, **multiplied recent decades** * but **concerns** of **trade diversion** * **extent** countries **trade w/ other ecos w/n regional** trade blocs **varies betw regions** **regional** trading bloc consist **c's located in geographical region** * can result in g**lobal trade fragmenting into self-contained regions, hinder spread of global free trade (some ^ lvl trade among themselves > outside trade area)**

Answer 58

**formal agreements betw countries to reduce trade barriers betw those nations** * agreement betw 2 countries is **bilateral** & betw **3/+** ecos, **multilateral** * **more accurate** as **preferential > free** bc give more **favourable access to g&s from 1 nation/group** of em **compared to another** * **sometimes** makes it **harder for nations outside preferential TA esp developing ecos to trade** (**may not create better conditions for free trade** as **developing ecos struggle** to **access global markets)** * **global** conducted through **WTO** to **remove barriers to trade uniformly across all ecos** * since 1980s profound ^ (non WTO), gvts choose preferential trade partners --> lucrative markets to develop export opps --> fragment & disrupt global supply chains

Answer 59

* when **imports/trade shifts from** a **more efficient (producer) exporter to** a **less eff**icient one **(another country)** **due** to the formation of a **TA/bloc**. * when **c's inside trading bloc reduce/ eliminate trade barriers among themselves**, but **maintain** barriers for **non-member c's**. --> **goods previously imported from** the most **cost-effective global producers outside bloc** may now be **sourced from less effi producers within bloc**, **bc** of the **preferential trade terms**. eg. tariff lvls, import quotas * **trade** **usually** **^s faster betw countries w/ trade agreements** but this is an **issue**

Answer 60

**extent** regional & bilateral trade agreements **assist/obstruct progress towards global free trade** * some say slices world into **separate trading areas** * others say regional trade agreements step **towards free trade -->** convince ecos to **reduce protection barriers against small group of ecos -->** eventually **remove barriers for world**

Answer 61

**Asia- Pacific Economic Cooperation** forum * **1989, 21 c's response to trading blocs forming other areas** eg. EU, NAFTA * original vision est **free trade among member** countries by **2020 not achieved** * **progress trade liberalisation, avg tariff rates reduced** * APEC **meetings never resulted in regional trade agreement** but **still** creates **forum for annual meetings** of **member c's leaders** to **discuss geopolitical priorities**, help **develop other TAs (cp-tpp)** * not preferential trade blocADOPTS **NON-DISCRIMINATORY arrangements (nations trade with c's outside grouping on same basis as forum members if prepared to give equal access to their markets)** **unlike** EU which **^ trade barriers for external countries** * goal never formalised in a TA and most annual meeting of leaders focus on terrorism & climate change --> receded frin centre of AUS trade policy * still indirectly supported trade liberalisation among members * 62% GWP, 48% GLOBAL TRADE

Answer 62

association of South East Asian Nations * est **1967** covers **emerging & developing ecos in SE Asia, most effective for trade in Asia Pacific** * primarily **trade with c's outside their region bc** they're **smaller emerging ecos** & **eco grwoth strats** centre around **exports to industrialised ecos** * **2007 ASEAN leaders** create **blueprint ASEAN Eco Community AEC** to create **single market of ~600 mill** --> **free flow of g, s, capital, labour & enhance attractiveness of SE Asia** as **foreign investment destination** & **improve lvl regional integration** * but substantially **^ lvl trade among themselves compared** w/ to other **c's outside trade area** (but continued to grow) --> risk that **regional trade blocs** **result in global trade fragmenting into self-contained regions --> hinder spread of global free trade**

Answer 63

* **PTAs** offer **partial reductions betw member c's**, while **FTAs** aim to **eliminate most trade barriers**. * **FTAs** typically lead to a **higher deg** of **eco integration betw c's than PTAs.** * **PTAs provides preferences, eg. lower tariffs for some products, compared to non-member c's.** * **Partial/limited trade liberalisation, less comprehensive** and ***many trade barriers intact*** * **FTA more comprehensive agreement** to **eliminate most/all trade barriers** between **member c;s** across wide **range g&s**, encourages **broader eco integration** * **near/Full trade liberalization for free movement of g&s**, although **some sectors excluded** ## Footnote integration, trade liberalisation, comprehensive,

Answer 64

**most imp**ortant **trade bloc in global eco** * **27** member countries across **Europe** * 17% of **global GDP**, recently **weakened** by **departure** of **UK** * **Common External Tariff against non-member countries**--> high rates of protection on agri products (Common Agricultural Policy, reduce market access for adv ecos for agri exports and dev c's for agri products) --> trade diversion * within EU **20** member countries **participate** in **monetary union 'eurozone' adopting** a **common currency (euro) and common IRs & MP (Eur Central Bank)**, major role in **eco integration** among **eurozone c's,** promoted **trade & eco integration** among member countries * trade off reduce national sovereignty limited ability to make independent decisions eg. trade, immigration

Answer 65

agreement between **2/+ c's/regions** to adopt a **shared currency** & **coord** their **MPs** * **reduce cross-border transaction costs**, eco **integration** among the member states, **^ trade & financial flows** betw em * share **common IR**

Answer 66

**Closer Economic Relations Trade Agreement** betw **AUS & NZ** in **1983** * **one** of most **comprehensive FTAs in world** * **prohibits all tariffs & export restrictions** * gradually **extended** in **recent yrs** to **harmonise bus regs & tax laws betw NZ & AUS**

Answer 67

* **slower progress** of **WTO's negotations --> Doha Round of WTO negotiations stalled for since 2001 --> c's turn to BTAs bc quicker & easier to negotiate than multilateral w/ nations of divergent interests** * **respond** to **rising protectionism** using **BTA to maintain/safeguard open trade betw c's ensure free trade continues when protectionist measures globally rising** * easiest TA to negotiate bc only factor interests of 2 participants

Answer 68

* impact smaller than **gvts claim 'large ^ trade'** bc costs **establishing & implementing underestimated** * can contribute **greater 'trade diversion' , not add to world trade but divert to nations in agreement** * do not guarantee harmonious relationship * only **reduce protection** on **country-by-country basis --> fewer eco wide benefits than trade liberalisation** involving **many c's**

Answer 69

* may move towards global free trade but also **hinder progress by focusing only 2 c's than creating multilateral trade systems** * **costs of est & maintaining BTAs underestimated**, not provide as much eco **benefit as promised bc expenses** in **negotiating & enforcing** * **trade diversion,** trade **redirected to countries part of agreement than increase overall global trade** ( may **not expand total amt trade globally but just shift trade flows from 1 country to another**) * benefits of BTAs often overstated by gvts, who claim result in large increases in trade but often smaller than expected

Answer 70

**WTO, IMF, World Bank** others Org for Eco Coop & Dev **(OECD)**, United Nations **(UN)**

Answer 71

* **global org** enforces exisitng **WTO agreement, resolves trade disputes** & is major **forum for global trade negotiations pursuing global free trade** * role to **implement & advance global trade agreements** * formed **1 Jan 1995, 1st international org w/ powers to enforce trade agreements across world** * **1993 AGREEMENT TO FORM NEW GLOBAL TRADE ORG** w/ enforcement powers reach beyond trade in goods & **include trade in services (insurance, banking) & intellectual property (copyright, trademarks)** **after replacing GATT** **(general agreement on tariffs & trade)** * **power extended** beyond trade in goods to **include trade in services** which GATT didn't * **164 member** countries, **halved avg tariff rates among member ecos** and **negotiate agreements** to **free up world trade** since, **signed voluntary agreements to reduce trade barriers in financial services, info tech, telecoms, shipping**

Answer 72

GATT (General Agreement on **Tariffs & Trade)** responsibility for **developing TAs** * GATT process **regular rounds of trade negotiations** conducted but **lacked an enforcement mechanism so many c's only implemented parts of GATT agreements**

Answer 73

* if **country believes** it's suffering **harm from another's failure to comply** with **its WTO obligations, lodge complaint w/ WTO** * **Dispute resolution process** commences, **if no agreement reached directly, WTO panel hear complaint and issue decision** * if **country doesn't comply w/ WTO's directive, other country/'s can impose trade sanctions (high tariffs on goods imported from offending nation)** * **effective** **betw smaller c's but less betw 2 largest forces in global eco (US and EU)** who **haven't formally refused to comply but** delayed & **continued to lodge appeals than accept WTO decisions**

Answer 74

**began** with **goal** to: 1. **reduce agricultural protection**, 2. **lower tariffs on manuf goods** 3. **reduce restrictions on trade in services** to lift **millions out of poverty** * **failed** due to **disagreements on access to agri markets, restrictions on producing pharmaceutical medicines, disputes betw developed & ing nations** & arguments on **manuf**acturing **protection** * produced **some results (voluntary agreement 2015 to reduce export subsidies for farm exports)**

Answer 75

**global rise in protectionist sentiment** * **US historically leading advocate** for **free trade & WTO but Trump Admin accused WTO failing** to **stand up to China's breach** of **trade rules threaten to leave WTO**

Answer 76

**international agency** oversees **stability of GF system**. * ensure **stability of ERs, ER adjustment & convertibility** role to **maintain international financial stability** **esp** in **forex markets** * **central role addressing financial crises in ind c's** * early role to oversee system of fixed exchange rates to stabilise eco relations betw ecoes but collapsed in 1970s --> ensure global financial stability * during financial crisis in **eco, region, world**, IMF **minimises crisis** * **LT support free trade of g&S & free movement of finance & cpatial throughout world markets** * often requires **countries** to **change eco policies** (adopt **structural adjustment policies** eg. **reduce size** of **gvt, privatise GBEs, deregulate markets, balance gvt budgets)** and **open up** their **markets before receiving financial assistance** * many international banks & private lenders require countries adopt IMF-supported policies before willing to lend to them, often **tailors policies to wider eco priorities focusing on climate risk more recently** * address financial crisis in mind countries, develop '**rescue package**' to help **stabilise** eco * 2010 altered gvt structure to give developing & emerging ecos greater say over IMF policies

Answer 77

during **financial crisis** where **its policies made conditions worse for ecos** * **neg impact of some reforms IMF demanded** * 2010s sovereign debt crisis in Europe IMF's demands **harmed most vulnerable groups in society while protecting FIs, disproportionately affected** * **moving too slowly/cautiously** during COVID

Answer 78

role **helping poorer countries w/** **economic development by providing grants, loans, aid & assistance** * **fund investment** in **infrastructure**, * reduce **poverty**, * **help c's adjust ecos** to demands of **globalisation**

Answer 79

1. **reduce rate of extreme poverty** to **<3% world's pop by 2030**, so most experiencing **'frictional poverty**' related to **ST** **disasters** eg. extreme weather events 2. **reduce inequality** by fostering **income growth for world's bottom 40%**

Answer 80

1. provides **'soft loans'** loans at **low/0 interest** to developing c's * **funds** used **for projects** on **health, edu, infras** 2. **promote private sector investment & development** by providing **investment, advice, asset management** * **direct financial assistance to private sector projects** in LI c's to stim **eco growth, job creation, private investment** 3. provides **conciliation & arbitration of investment disputes betw States & investors --> stable enviros for investment** in LI c's * **no direct financial assistance** but crucial ensuring **legal disputes handled fairly** 5. **risk insurance to private investors** & **ATTRACT FOREIGN investment** * **with IFC stimualte private sector growth for eco development** in low incoem nations * promotes **FDI** by providing **political risk insurance & credit enhancement to investors & lenders**

Answer 81

by **contributions from member c's** and from **own borrowings in GFMs** * makes loans to **developing nations** at **rates below standard commercial rates** to **fund infrastructure projects** eg. power plants, roads * funding in pandemic helped countries obtain vaccines, strengthen health systems & reduce eco damage from pandemic * global importance as **lender** to **developing countries** **declined** as **private lending markets expanded recent decades**

Answer 82

**global org** whose membership covers **193** **member states (mroe** nations **than any other political/eco org)** * **primary role administer WTO, IMF** * develop **several international agreements to enforce human rights & political freedoms** which **strengthen** country's **prospects for eco growth & dev** * **limited decision making powers** bc **LACK OF ENFORCEABILITY**, **relies on support** of its **member states** & **budgets for diff arms of UN** are **small compared to national gvts in adv ecos**

Answer 83

develop **international standards easier** for **trade & investment flows** **betw nations** * **World Health Org** * **UN Children's Fund (UNICEF)** * **UNHCR/ UN Refugee Agency**

Answer 84

* established to **reduce global poverty & inequality 2015-2030**, **17** goals covering: * **global poverty**, *hunger, * wellbeing, * **edu**cation, * **gender equality**, * **clean water & sanitation**, * clean energy, * eco growth, * sustainable cities, * **climate action**, * **sustainable use of land & oceans** incorporate **169 targets** that **UN member states pledged to take action** towards from **2015-2030** * only **minor progress** made on **most goals** since

Answer 85

**international eco org** of **38 mostly adv ecos** committed to **democracy & open markets** * **primary goal** **conduct & publish research** on wide range **eco policy issues** and **coord eco coop among member nations** eg. develop **common policy agendas** * advocate **'inclusive growht' starts challenged** trad **assumptions** that **policymakers must trade off inequality vs eco growth, bc many concerned lvl inequality ecos constraint on eco growth** * 2021 int agreement to reform corp tax rules **min tax rate to reduce incentive for TNCs to divert revenues** to **offshore tax havens** to **avoid paying tax** * **limited bc doesnt hold tangible powers for action**

Answer 86

orgs as forums for **world leaders** imp **coord**inating **policies betw major ecos esp eco/financial crisis** * aim to enable **heads of state** along **w/ treasurers & central bank governors to discuss global eco issues** w/ attention to **eco stability & growth** * **early 2020s** fostered **greater coop** of **F&MP responses to pandemic**, align **climate change policies, overhauling taxation of TNCs**

Answer 87

* **recent decades most important** * **7 largest industrialised nations (US, UK, France, Germany, Canada, Japan, Italy)** * **eco council** of **world's wealthiest nations meet annually** to **discuss global eco conditions** * **unofficial forum of industrialised democracies coord**inating **global macroeco policy bc influence over F&MPs of world's largest adv ecos** * **agenda often includes issues climate change, global poverty, (int) security**

Answer 88

**membership no longer represents most important forcesi n global eco** as **nations** like **China & India more important to global eco than Canada & Italy** * **share of global GDP shrunk**, cover **only 10% WORLD'S POP** * **DIDNT PROVIDE MAJOR LEADERSHIP ROLE WHEN GLOBal eco faced** sudden onset of **pandemic w/ dislocation of trade, travel, eco activity** * **recent years** attempt to **expand to include 5 developing countries named Outreach Five (O5) Brazil, China, India, Mexico, South AFRICA** * **nothing really happened out of it...**

Answer 89

**19 world's largest national ecos + EU**, cover 80% worlds GDP and 2/3 world's pop * **membership** includes several **emerging ecos** become **driving** force behind **world eco growth since 2008** * key role in global response to GFC( helped **coord**inate **fiscal stimulus& improve supervision of global financial system & international FIs**), **less central addressing pandemic (mostly determined at national lvl)** * **international eco coop weakened recent yrs** due to **US absence of leadership/other major ecos** * main activity rn is its **annual summit** dealing with range of **current issues** and **doesn't advance specific eco goals, relying on individual heads of state to provide leadership to advance shared goals but efforts towards international coop weaker recent yrs**

Answer 90

* opp life **vary sig in health, edu, income, life expectancy** * **despite** **tech progress,** **inequalities persist betw poor & wealthy c's & within** them * but **overall LS improving** in **most countries rich & poor**

Answer 91

**income** * **measures ability** of **nation's citizens to satisfy material wants** * **GNI** **sum of value added by all resident producers in an eco plus receipts of primary income from foreign sources**/total income earned by domestically owned FOP over POT aka **regardless earned within/across borders** * unlike GDP doesnt account income of foreign residents earned from dom production but includes income receieved by dom residents from overseas production * **IMF & WB classifies ecos** as **low/mid/high income c's** * **wealth available** to **c's citizens** esp w/ **large pops working abroad/sig foreign investments** * if domestic eco (GDP) ^ but its citizens/companies have sig investments/workers earning income abroad, GNI > GDP * if foreign investors make more money within C than domestic investors earn abroad, GNI COULD BE < GDP**** * **Real GNI figures** obtained **by discountign GNI growth for** effects of **inflaiton** * **broader measure** by including **int. income flows** (mroe comprehensive)

Answer 92

* EG ^ real GDP over POT * quantitative --> measure ^GDP, **income, emp, LS** * by **^AD/AS (usually both)** * **^AS** expands eco's **productive capacity** by 1. **^use resources (quantity)** eg. unutilised land, LF^, adopt new tech & 2. **^productive use existing resources (quality)** eg. capital ^productivity land & labour, edu & training programs ^ labour, capital productivity * ^AS --> **outward shift** eco's **PPF** (when producting **at capacity, EG** only if **mroe resources available/tech adv/efficient use existing resources) --> current & future LS ^** ED **improvements wellbeing** of nation's ppl * qualitative --> measure **life expectancy, mean yrs schooling & real GNIpc** (measures income > output w/ GDP) * **outcome of EG,** related to **structural change** which comes **with** **sustained EG:** 1. **transform** society from **rural & agri** based to **urban & industrial/service** based 2. change **emp patterns** (bc of it) & ^mechanisation 3. construct eco & social **infrastructure** (roads, ports, railways, power plants, schools, hospitals) 4. **educated, healthy pops (mroe productive WF)** w/ **high disposable incomes** (capacity to drive further growth via **consumer expenditure)**

Answer 93

1. savings channeled through FMs to bus for investment -->^quality LLC --> ^ productivity --> EG 2. benefits EG shared (VARY EXTENT) w/ distribution of income to workers, --> ^real LS - 3. higher incomes --> ^saving --> mroe investment & EG

Answer 94

* **lack SAVINGS to fund INVESTMENT** * obtain finance by **borrowing overseas/attract foreign investment** but both **diff** bc **risk for lenders** & must **repay w/ interest** & **investment benefits repatriated** (returned to c) * **lack DOMESTIC DEMAND** to **^output & attract investment** * some **pursue export-led growth** to **^EG** but **msot developing** c's **lack comparative adv**

Answer 95

EG & ED related bc EG required for & leads to ED, ED creates conditions conducive to ^EG

Answer 96

the **exchange rate/currency** used * if use **USD, inaccurate comparison LS comparisons** esp **developing c's** * **price** of **g&s** in **developing C low relative to prices in US**, measuring **GNI in USD terms underestimate true income of ppl in developing C's (exchange rates** tend to be **undervalued**) * adjust by using PPP (**purchasing power parity**) **before comparing GNI lvls betw c's** * adjusts GNI (eco sizw) to reflect PP of currencies within nations , compare real income betw c's bc **market ERs may not reflect true diffs (FLUCTUATE: driven by speculation, IRs, trade imbalances** than just **price lvls/SOL**,, **PRICE LVLS** **can vary dramatically betw c's)** * if **2**** c's similar GNI at market ERs but 1 lower cost of living, PPP shows ppl in cheaper c have higher REAL PP**

Answer 97

* **rate**s of **currency conversion** that try to **equalise** the **PP** of **diff currencies**, **by eliminating** the **diffs in price lvls betw c's.** * to **compare relative value of currencies based on prices of a standardised basket of g&s in diff c's & adjust for diffs in cost of living & inflation rates across c's** * **measures how much a unit of a currency can buy in g&s in diff c's** * **compares** the **cost** of a **standardised basket of goods** **across c's** (if basket $50 US & $45 EU, PPP ER **50/45** = **1.11$EU** worth) * **avoids issues** caused by **ST ER volatility** --> **measure** **real value of moeny in each c by focus PP than market ERs**

Answer 98

* **high lvl inequality** as **high income ecos receive 2/3 world's income in raw GNI but <1/2 PPP adjusted figures, 1.2bn ppl out of 8bn (low income ecos <1% size global eco) * consider **POPULATION SIZE of ind countries & rate of pop growth using real GNI per capita (divide by pop)** * ppl in high income regions 1/7 ppl enjoy income lvls ~5 times than low & middle income countries after adjusting PPP * LS extremely low in sub-saharan Africa & south Asia regions 1/3 world's pop

Answer 99

almost all nations experienced **eco growth --> higher incomes due to ^ in GDP**

Answer 100

**no** although **gap lessening reduction of income inequality in global eco very slow**

Answer 101

* **wealth distributed more unevenly than income in global eco** * unlike income (flows vary over time when ind's contribution to prod changes), weath is assets ind accumulate over time, can use to improve edu/other ways to generate income (purchase shares, bonds, real estate) * **90%+** world's wealth held by **inds in NA(1), EUR, Asia-Pacific (China, Japan, AUS)** but in **Latin America, India, Africa (least)** small shares global wealth. * 2023 top 1% world pop owned 45% world's wealth most in NA, EUR, China, Asia Pacific (eg. Japan & AUS) * bottom 50% world pop owne <1% wealth

Answer 102

**broad measure** of **welfare** in a **nation** includes** indicators** of **health, edu, enviro quality, material LS** * **measure improvements** in wellbeing/**welfare** than how much extra money ppl have * **higher incomes** crucial in **improving wellbeing esp** for those living in **poverty (relative/absolute** but **accounts other QOL indicators (health standards, edu lvls, enviro quality, income inequality**, * demographic features (urbanisation rates, pop growth rates, fertility & mortality rates) vary betw developed&ing nations w/ others eg. dependence on foreign aid as % GDP, ratio agri prod to GDP

Answer 103

* GNIpc measures material LS residents in country but avg incomes dont account incoem distr/non material indicators of QOL * growth in incomes pc sign EG, higher in med-low human dev c's, now stalled since covid

Answer 104

**measure eco development** devised by **UN Development Programme (UNDP)** ,**alt** measure to **GNI** * track progress ind c's & global efforts to reduce extreme poverty over time * more comprehensive measure human dev > GDP/GNIpc bc accounts nonmaterial QOL not always related to income * **score betw 0 (no human development) and 1 (max** human development) accounts: 1. **life expectancy at birth**, * **AVG lifespan inds in c --> health & QOL** * **estimate based on current health conditions & LS** 2. **lvls edu attainment** & * edu to **develop skills of workforce & future development potential** of an **eco** * **measures mean yrs of schooling** (**avg no. yrs attended edu 25/+yo)& expected yrs total school attendance** for **school age children** 3. **material LS** (measured by **GNI per capita)** * measures **sum of gross value added by all resident producers in the eco + income from foreign sources on PPP basis** * **avg income per person in c, adjust for PPP** --> ppl's **access to resources & ability decent SOL**

Answer 105

**differences betw growth & development across world** (hence need broader measures of welfare > income/output) * EG crucial for high lvls development still * **countries w/ similar HDI lvls but** very **diff income lvls/similar income lvls but diff HDI** suggest **some c's, benefits of income not well distributed due to high lvls inequality, effectiveness of edu & hc systems not always determined by national income & armed conflicts devastate development lvls**

Answer 106

* live **longer, healthier lives** (**life expectancy)** * **acquire knowledge & skills by accessing edu (mean yrs schooling)** * decent **LS** w/ higher earnings (**^GNI pc**) buttt **uneven** eco & health impacts of pandemic w/ **emerging & developing c's severe**

Answer 107

1. advanced ecos * **high lvls eco development** * high integrateion in GF system, diversified export base & liberal-democratic political & eco institutions * **established industries, highly developed FMs & typically service-oriented (tech, healthcare, finance) with stable governance & high SOL** * **high income countries** have **GNI per capital lvls (PPP)** above USD$12, 535 mostly in **North American** & **Western Europe** * **less in Asia Pacific** eg. **AUS, NZ & Latin American & Caribbean regions** * **high GDP per capita, edu lvls, stable political sytems** * largest ecos/very small ecos and most in OECD

Answer 108

* **countries** with **low income lvls, less industrialisation, poor infrastructure & weak/unstable political institutions**, **poorer edu & health outcomes**, many living in **absolute poverty** * **may** **depend**e heavily on **agri/natural resources** * often divided into **low income** and **middle income countries**

Answer 109

* **high lvls income inequality** w/n **their ecos** * **depend**ence on **agricultural production for income, employment, trade opps** * **rely** on **foreign aid & development assistance** as **major source of income** * **low lvls labour productivity, industrialisation, tech innovation & infrastructure development** * **weak political nad eco institutions** & **high** prevalence of **corruption**

Answer 110

* experiencing **rapid industrialisation** & **sustained high lvls of eco growth** * strongest growth rates **5-10%** * **income lvls vary but fast growth in income** * **substantial manufacturing sectors** * **neither high income/adv** not share **characteristics** of **developing ecos** * ecos previously known as **newly industrialised ecos, transition ecos (from socialist ecos** eg. China) and **developing** ecos **w/ improved prospects (India)**

Answer 111

**45** nations w/ **lowest GNI per capita lvls, weak human assets (health &Edu) & high eco vulnerability (eco structure, size, exposure to shocks)** * **GNI per capita** threshold ** disprop large in relation to global poverty figures** * exacerbated by **political instability, heavy dependence on agriculture hinder eco grwoth, fast growing population (pressure resources, health)**

Answer 112

very **broad**, **can group dissimilar ecos together** eg. **brazil & Indonesia both emerging** but **very diff LS** * **some don't fit into one** category **(Bulgaria better** off than **developing but not adv/emerging)** * but still **impo for understanding reasons for eco ineq betw nations**

Answer 113

to explain conditions needed for sustainable EG&D **improve eco & social conditions in low income & developing ecos** to promote **sustainable eco grwoth & dev, LS, welfare for ppl in regions** * **structural problems** **prevent c's** from achieving **high lvls development & policies for LT progress** * **compare characteristics** of **high income & developing ecos** to highlight **problems** faced by **poor countries** eg. **high rates pop growth, low lvls skills development, weak legal & FIs, inequality, endemic corruption** development gap contrast lvl ED betw adv,emerging,developing c's (dinstinguished by incomes pc, lvls S&I & capital formation, EG) * leads to sig contrasts LS betw 3 groups. some emerging closing gap by sustaining ^EG, ^incomes pc & reducing overty, domestic S&I sometimes exceed most adv but still severe global inequalities * incoem gap 'North-South Divide' majority emerging & developing south (eg. Asia, Africa), most adv north (eg. EUR, NA) * poor c's high rates pop growth (^ demands strained public services), low skills dev, weak legal & FIs, endemic corruption

Answer 114

**Global** factors (related to the **structure** of the **global eco**nomy) * global **trade system** * global **financial architecture** * global **aid & assistance** * global **tech flows** and **domestic** factors (**within individual countries**). * **eco resources (natural, labour supply & quality, access to capital** & **indebtedness, entrepreneurial culture)** * **international factors (political & eco institutions, eco policies, gvt responses to globalisation)**

Answer 115

1. **developing c's** that **export agri commodities** **severely affected** by **high lvls **protectionism in adv ecos agri sector** (bc not competitive) * while total agri support to producers in OECD fallen by like half since mid 1980s, remained high in rich ecos 2. **regional trading blocs (EU)** can **exclude developing nations from accessing global consumer markets** * excluded from trade opp bc **bilateral agreements rarely** **as comprehensive as regional trading blocs** * eg. EU, 3. WTO'S **Doha Round** of **trade negotiations** in early 2000s promoted as '**development round' bc of focus on trade reforms to benefit poorer nations** * **failed** major reasons is **high income nations resisted making concessions on issues would've provided greatest benefit to developing c's** * **recent WTO negotiations** focus on smaller package **only** tries **expand tariff-free access for exports from least developed countries** & **postpones complex trade negotiations** 4. **beenfits** of **FTAs** often **unaccessible** to developing nations bc of **substantial cost implementing** international not reements & **lodging appeals against other countries' protectionist measures** * **complexitiy** of many trade agreements **favours** benefits of **global trade system** towards **richer countries** and **entrench global inequ**

Answer 116

**deregulated GFMs & GF system** enable **free flow f funds around world** to **create development opp** 1. **historically**, **LT international investment flows favoured developed c's** * BUT since **2000s** **developing ecos receive ~2/3 global FDI** **flows** * **faster growing emerging & developing ecos** (China, brazil, India, Russia) **benefit most** 2. **ST financial inflows (eg. investments in currency & stock markets**) **favour** **prosperous emerging ecos** bc offer **higher financial returns** for currency & stock market **specul (investors)ators** * **BUT** these **regions** end up **exposed** to **economic volatility**, which **set back eco development for years** while **GFM speculators** simply move to **invest in other countries** 3. **international financial rules haven't** **kept pace w/ globalisation** & tolerate **loopholes** that contribute to **large flows of income/wealth** to those **already hold substantial** wealth( minimise amt tax paid on it eg. profit shifting to tax havens, lost gvt revenue suffered by developing more disprop bc larger prop total revenue) 5. many dev c's have **LARGE FOREIGN DEBT BURDENS** * **interest repayments** on **past loans reduce income** available for **gvts** to promote **grwoth & dev** by spending on **edu, healthcare, infrastructur**e --> many **dev c's spend more on debt servicing** than public health 4. **role of IMF (int org oversees GFS)** under scrutiny recently bc **impact** on **developing countries** * **'structural adjustment' policies criticised**, advocates interests of **rich countries** and **not appropriate to conditions** of many **developing c's** * **acknowledged** concern w/ asistance packages in COVID eg. 0 interest loas to LI c's, credit facilities tailored to diff needs dev c's but **still** argue priority to **protecting interests of adv c's FIs & TNCs > LT eco interests of developing c's**

Answer 117

**developing c's** make **tsmall-scale efforts** to **address global ineq**, **insuff**to **overcome large diff** in **LS** 1. **total lvl development aid provided by high income ecos only 1/2** lvl they **promised** since **1970s (0.7% of GDP)**, **OECD** said only **5 member** countries met/exceeded **target 2023** 2. **sig proportion of official development assistance** is **'phantom aid'**, aid funds **don't improve lives of poor** * **OECD 1/6 dollars** of **foreign aid** is **'technical coop'** often **paid to consultants in donor c's**, **11% aid debt-related** eg. relieving/refinancing **past loans don't contribute to new development** * foreign aid budget **5%** spent on **administration**, **reduce amt available** for **development projects & humanitarian relief** * figures don't reveal prop of aid that is **'tied aid'** (aid must spend on **overpriced/unnecessary g&s** **produced by donor country**) (US provides food support sometimes **buys American crops & ships to africa greater expense than buying crops in local region)** 3. **distribution of aid** by **HI countries** can reflect **strategic & military considerations** than needs of poor c's * **multilateral aid agencies more effective than individual c's who provide bilateral aid** 4. **multilateral development aid** (distributed by **WB, IMF, UN**) better **targeted at worlds poorest countries but < 1/3** value of **total development assistance from Development Aisstance Committee members**

Answer 118

* **new tech adopted more quicker** in **ecos w/ better infrastructure, higher lvls** **edu** & already **high penetration rates of related techs eg. broadband infrastructure** * **1/2 worlds pop don't use internet** and **most** w/o lived in **developing ecos** --> **bus & consumers limited access to online opps** to **sell & purchase g&s in a rapidly expanding market**, reinforcing **eco isolation from digitally connected & developed world** * **'digital divide' world increasingly reliant on digital tech** * **new tech** geared to **needs** of **HI countries** bc prioritise areas of scientific research w/ **little benefit to poorer nations w/ abundant labour supplies, young pop whose main health risks are common infectious diseases & limited capital resources** (labour-saving devices, pharmaceuticals for ageing in rich countries) 3. **developing** nations find **diff to** gain **access** to **new tech** * **intellectual property rights restrict benefits of technological transfer to poorer countires bc cant pay developed c prices for tech**

Answer 119

* **inputs** for production **(energy, fertile agricultural land, water supplies, minerals)** * ecos w/ **abundant, reliable supply of natural resources better opps** for **ED (even if unsuccessful using** opps) * abundance also can **hamper ED if** leads to **overvalued ER, narrow export base & overreliance on small no. industries to drive EG** * countries rely natural resource exports **exposed to downturns in commodity prices** --> **sudden falls in national income**

Answer 120

ECO RESOURCES (LLCEIC) * natural resources * labour supply & quality * **access to capital & indebtedness** * entrepreneurial culture * lvls **inequality** * **exposure** to **impact** of **climate change** **INSTITUTIONAL** FACTORS (IEG) * **political & eco institutions** * **eco policies** * **gvt responses to globalisation** GLOBAL **(FATT**) * global **trade system** * global **financial architecture** * global **aid & assistance** * global **tech flows**

Answer 121

* **high income countries** tend to have **highly educated, skilled labour** resources * **low incom**e nations have **high pop growth, lower lvls educational attainment, low health standards --> lower productivity lvls** **(reduce workforce participation & productivity** --> **underutilised resources** --> **maintain higher rates eco grwoth**) eg. inadequate edu facilities & high rates AIDS, barriers girls edu developing c's vs sig investment & develop service-based eco

Answer 122

* difficult access to capital funds for investment --> **lower EG&D** * **low income lvls less opp for savings for investment** **diff** gaining access to capital **for investment & development --> lower rates eco growth & lower LS** * **poorly developed financial systems diff for bus to** **access loans for investment** * small research orgs & **limited funds for bus innovation fewer opp for dev c'sto develop new tech/pay for patents to use tech developed in other c's** --> perpetuate cycle poverty (low incomes pc --> low saving --> low investment & capital --> low productivity ...)

Answer 123

4. **entrepreneurial culture** * **diff to quantify diff in culture betw ecos** and **how impact eco perf** but **country's history & social institutions impact eco success** * **strong civil society institutions (eg. charities, trade unions), cultural disapproval of corruption,** **respect for rule of law (against will of elites) & aspirations towards work, enterprise & personal responsibility** can support EG&D * some trad cultures impede adoption new techs etc. to sustain ^EG&D

Answer 124

* in **distr of income & wealth common in dev c's** esp w/ **high concentrations of poverty**in poorest countries but **more in middle income countries** * **high lvls wealth concentration --> lower rates EG&D** since low&mid income HHs reduced spending power (lower AD) & access to edu opps & hc (lower AS & HDI)

Answer 125

* inequality betw c's * extreme weather events affect **croy yields, rising sea lvls coast communities risk** * **warmer temps **expose **pops tropical regions infectious diseases** * **desertifiaction threaten access to water & resources** * **developing** c's **fewer resources to address** CC through **mitigation & adaptation measures**, * most exposed to CC Africa & Pacific lo-lower/middle income lvls

Answer 126

**political stability, legal strucutres, central bank** **independence**, strength of social institutions gvt's domestic & external eco policies can affect ability nation to achieve eco development 1. political & eco institutions (residents --> eco development) * **political instability, corruption & lack law enforcement by gvt agencies** can **undermine investor confidence, reluctant** to take **risks** if **bus interests threatened by inadequate structure** for **resolving legal disputes, corruption** * **diff to quantify impacts of weak political institutions on ED** but can **use Corruption Perception Index each yr by Transparency International** * **score 0 (c relatively high lvl corruption) to 100** (relatively low lvl corruption) * **developed ecos lower lvls corruption than developing & emerging**

Answer 127

* **policies** relating o **trade, financial & investment flows, TNCs** & **country's participation in regional & global eco orgs** influence **eco's ability to take adv of** benefits of **integration** * eg. **eco restructuring, efficiency, access to foreign capital & tech** and access to **overseas goods markets**

Answer 128

* developing economies **greater opps to grow by producing goods for global consumer markets**, --> **greater access to new tech & foreign investment** * **remarkable growth** exp by emerging & developing ecos **embraced international trade**, **foreign invecstment**, participation of **TNCs** --> **globalisation** facilitates **higher eco growth** rates * **recent decades fastest growing** ecos **emerging**ecos (china, india) while **slowest adv ecos** * since 19**90s, emerging & developing** ecos **catching up to adv** ecos but **many dont** when **assess**ing **income per capita**

Answer 129

* **how gvts balance** roles of **market forces & gvt intervention** in the eco * if **all** **major decisions left to market forces, can** achieve **high lvl o growth but not improve edu, healthcare,, QOL** * **excessive gvt control over eco decision making** can **constrain entrepreneurship & innovation --> reduce eco growth** * **countries** **highest lvls human development** have both **strong market eco and sig gvt investment in human development** * **developing** eco **gvts less able** to **reduce ineq bc collect less tax revenue & **cant provide same lvl public services & social welfare**, less able gvt spending to stimulte eco during downturn --> mroe vulnerable changes in BC & impede efforts sustain LT EG & reduce inequality

Answer 130

* high income ecos (**esp through TNCs)** **growth opps in global supply chains & new global service markets** * **most globally integrated ecos are adv**, exp **comparatively weak growth** over **last 2 decades** esp since **GFC, long period lacklustre growth despite record low IRs & very low inflation bc high lvls indebtedness constrained gvts** from **using fiscal** policy to **stimulate** growth

Answer 131

* BUT globalisation & greater eco integration caused **disruptive structural changes** in **some regions** * **relatively free movement of ppl, goods, info across national borders increases risks** (**cybercrime**, hack pc networks, **pandemics**) * **overall** evidence **accelerated eco growth** but effect **distributed unevenly** across **geographcial regions**

Answer 132

mainly bc link betw globalisation & eco growth * globalisation **lift eco growth rates ind ecos --> raise income lvls --> more resources** for **edu & healthcare**, programs for natural **enviro** globalisation --> growth ind countries --> **^ income inequalitiy**, accelerate **climate change** & **enviro damage** * **slow global resposne **to threat of **climate change** likely **widen gap betw growth & development indicators** in **next decades** as **output in some sectors disrupted** & countries **forced to allocate more reousrces to address eg. extreme weather events**

Answer 133

over **long PIT (1980-2018**), **almost all countries** exp **major improvements** in **eco development** * little evidence globalisation contributed negatively to it * **declines in eco dev restricted to** some that **experienced upheaval in transition to market ecos/seriosu political turmoil**

Answer 134

* **WITHIN** countries bc as **trade & financial flows** grow, **changes structure** of ecos * **^trade liberalisation --> ^ export opps** --> **^ incomes of agri workers** in **developing c's** * **lower tariffs on imports improve SOL for poor** by **reducing prices** of goods * **adv ecos, higher lvls trade shift emp towards higher paid services industries** but also **depress incomes of workers in import-competing secotr** eg. american emp vehicle industry bc **US car producers comepte against cheaper imports from Asia** * **^ financial flows --> greater emp opps** & fuel **EG** but **concentrated** in **higher skill & tech sectors, favour** those **already better off** * financial globalisation ^inequality between c's? * income inequality **^** in **emerging ecos bc global mobility of skilled labour --> highly skilled workers emigrate adv ecos w/ higher paying jobs** unless receive higher pay * large **^wages** for **highly skilled workers while incomes others grow slower rate** * **^ inequality reduce eco development,** **rising trend** bc **tech change shifting PPs away from low skilled labour towards higher skilled jobs, benefit** ppl w/ **higher lvls edu but ^ u/e for less skilled workers**

Answer 135

* **goods produced** through **multiple stages in diff ecos through GSCs** (**instead of traditional trade of finished goods from 1 country to another)** where countries engage in **vertical specialisation**, focus on only **1 or 2 parts of PP** based on comparative adv * **after pandemic** finding **alt options for sourcing** **materials/improving reliability of supply chains** key focus for**TNCs & gvts (delays & disruptions to agri, mining, pharmaceutical supply chains**, **eco**s didnt have **cpacity to manuf goods w/o supplies** from **China)** * **remove restrictions on foreign ownership & development of global capital markets** -->**TNCs** growth **dominate world's major industries (motor vehicles, telecommunciations, pharmaceuticals)** * merger activity concentrated * **perform better than domestic firms on productivity, sales, prod size, export market share but avg beenfits to local community lower bc foreign firms use less domestic capital & labour** * full adv of FDI inflow only realised if TNCs connected to local suppliers * **dont operate under laws of just 1 country** and **can move production facilities to other countries w/ weak laws & structure financial flows to avoid paying taxes**, **lower labour standards & enviro protection laws in developing nations** --> rxploit workers and enviro degeneration

Answer 136

* **globalisation of FMs increased reliance & access on foreign sources finance for investment aka more c's greater access to overseas funds for investment than before** * **FDI greater role eco activity every region** * **large increases** for **high grwoth emerging** ecos who **relaxed barriers to foreign investment** * but **benefits** of **^ FDI flows concentrated on** **smaller no. ecos** **already favourable eco prospects, only little flowing to LDCs** * **growth ST financial flows destabilising impact** on many **ecos** * **1st time investment expanding beyong physical capital into productivity training for labour and LT bus relationships**

Answer 137

* **low incoem countries desperate** to **attract foreign investment** & **earn higher export revenue --> eco behaviour harms enviro (deforestation** for paper, **deplete marine life** w/ unsustainable fishing practices, **poison water supplies** by **mining operations,** **manuf** **industries** cause **pollution**, **^ CO2 emmissions from power plants --> global warming**_ * **growth global trade increase consumption of non renewable fuels for transport by air, road, rail, sea** * **most sig enviro threat** **climate change** **warmi**ng of **atmosphere irreversible impacts**on natural **enviro (oceans, marine life, weather, wildlife, air quality, water supply)** * **CO2 emmissions** contributing to CC from ind countries but **impacts affect world, nations must work together to address** * globalisation offers **opps to protect** world's **enviro** from harm **by forcing ind nations to address global responsibility for enviro preservation, costs shared & increase scrutiny of enviro practices for TNCs** * facilitated **transfer new tech** to **improve energy efficiency & reduce enviro pollution** * over time create **inernational mechanism**s to **enforce agreements preventing enviro damage**

Answer 138

**United Nations Framework Convention** on **Climate Change (UNFCCC)** * **1997** THE **unfccc summit of world leaders produced Kyoto Protocol on Climate Change** set **carbon emission reduction targets for industrialised countries, expired 2012** * **after, UN CC conference unable forge** new deal so **extended KP to 2020** * after was **paris agreement**

Answer 139

* **after kyoto protocol** * scientists believe **benchmark keep increase global avg temp <2 deg above pre-industrial lvls** necessary **to prevent CC imapcts, 2015 UNFCCC Conference in Paris agreeement w/ 197 countries** included developing nations who **refused to ratify Kyoto Protocol** (China, India) * Paris Agreement several inbuilt mechanisms for **transparency & review process to increase global scrutiny** encourage **countries meet respsective contribution to global emissions reduction**, came into force **Nov 2016 w/ 195 countries ratified it by 2020**

Answer 140

**influence increased** substantially during **G era driven by global info & communications networks --> global FMs dominate finacnial flows around world** * **gvts encouraged development GFMs** by **removing 'capital controls' on flow of finance, floating exchange rates & deregulating domestic banking sectors** * countries can **conduct international transactions via forex markets** * **bus easier** to **access loans/attract investors** bc **not confined to domestic FMs** * **efficient international FMs** encourage **greater transparency of bus & gvt actions --> eco development**

Answer 141

financial markets**shift massive volumes money around world daily** * if **investor sentiment turns agaisnt** certain **eco, collapse exchange rates, eco schok, recession, rising u/e** * eg. **GFC collapse worldwide investor confidence & seized global financial system** * **central banks flooded FMs with liquidity, gvts guaranteed banking deposits to improve confidence**, gvts providedd 'bail outs' to **prevent troubled banks & financial institutions from collapsing**, **world eco contracted** * pandemic cut irs record lows and high debt lvls

Answer 142

* countries with **higher lvl trade --> ^integration + specialise --> experience faster eco growth** * when **world eco growth higher, ind ecos likely benefit from upturn** * **simultaneous upswings** in **US & China** propelled **global eco** to **fastest growth** rates in **3 decades (+ shocks)** * as extent **TRADE & FINANCIAL INTEGRATION continue ^, likely greater synchronisation (convergence) of IBC, intensifying downturns & upswings in global eco (contagion, external/exogenous shock)** * whilst **diff lvls growth, shape & direction of changes in BC synchronised w/ IBC** ( **change**s 1 eco -->**trade, financial flows, global supply chains** for other eco) * **increase need for macroeco policies, ecos generally dont coord** macroeco policies **unless glbal crisis** * **BC depend more on eco conditions & policies of larger interconnected ecos**,

Answer 143

**net loss** in no. **migrants** in c * no. ppl **LEAVE exceeds** arriving * reduce **human capital** and lose **skills** * c's may benefit from **^ remittance flows, int bus networks and sharing tech developments**

Answer 144

net gain in no. migrants in c * no. ppl ARRIVING exceeds leaving * ^ human capital and skills,

Answer 145

**diff parts** of a supply chain **operating in diff c's based on comparative adv**, allow bus **reduce prod costs** * company **source raw materials from developing ecos**, **manuf in emerging** ecos and **sales services in adv** ecos * **c's specialise in parts of PP they have comparative adv** * **mid & low income ecos** benefit **employment** & **access cheaper g&s**

Answer 146

* distance from rest of world * relatively high reliance on exports & imports

Answer 147

* highly protectionist country bc gvts thought needed to **protect AUS manufacturers** who found **diff to compete** bc **relatively small pop & low production lvls** aka **manufacturers in larger ecos overseas benefited from greater ecos of scale** * **Whitlam Gvt 1973** first push to reduce protection but **1988 comprehensive program for trade liberalisation** * next **decade** AUS **reduced tariffs faster than other adv** ecos (beside NZ)

Answer 148

* make **dom industries more internationally competitive** by exposing to **comp** from **import**ed goods * encourage **resources to concentrate** the eco on areas where aus has **comparative adv** * benefit from **^ integration w/ global eco** by allowing **consumers & bus' access to g&S on global markets** at **low prices & high quality** * **structural change in LT** to encourage **eff firms to produce** what **global eco demands**

Answer 149

~90% * remaining are mostly **manuf**actured goods w/ **general tariff rate 5% or less** (hsitorically **motor vehicles, clothing, textiles** manuf industries protected w/ tariffs) * **most remaining tariffs dont apply to imports from c's AUS has FTA with** * despite closure of AUS car manuf industry, gvt still tariffs **new cars** & **heavily** restricts **imported 2nd hand cars)**

Answer 150

raise little revenue & AUS **no longer produce** them in **material quantities** * 2024 removed tariffs almost 500 imported products

Answer 151

*weighted according to what g&S traded most * 0.5% * lower than many adv ecos * less than 0.5% considered large by WTO (exceed 15%)

Answer 152

least * far **fewer subsidies** for **dom producers** than **NA, WE, EA (for their agri sectors)** * AUS **lowest lvls agri protection OECD** * reductions typically **beyong required by international TAs** * further **lbieralise** trade (tax luxury cars hurts exporters, foreign investment restrictions, **prolific** use of **ANTI-DUMPING MEASURES** **sometimes** **no suffiecient eco justification**)

Answer 153

**AUS Trade & Investment Commission** * **administers export assistance programs** (which still exist) * export assistance includes **financial assistance, info** on **potential export markets, marketing advice** * **main program Export Market Development Grants (EMDG) streamlined assistance** for **promotional activities**, develop **marketing skills**, improve **program design & access info for exporters**

Answer 154

reduce own lvls protection * TAs to access overseas markets

Answer 155

**ANZCERTA** AUS NZ **Closer Eco Relations** TA * led to ^ **standardisation of laws , commercial structures, bus practices, free trade** for both,

Answer 156

increasingly use **less for new trade opps** and **more to shore up existing rules around free trade when protection rising**

Answer 157

* **overlapping** & **inconsistent trade rules for exporters & importers** * **exporter** need to **comply** with **diff rules to sell same product in diff foreign markets --> inefficiency**

Answer 158

AUSFTA * tariff reductions esp agriculture & manufacturing * removed entirely since 2015 * US is AUS' 3rd largest trading partner KAFTA * **improve access for AUS exporters, opps for AUS investors & investments in SK --> attract direct investment from SK into AUS** * faciltate **services trade** (legal, accounting, financial, engineering, telecomms, edu) very comprehensive * 2023 SK was AUS' **3rd largest export market**

Answer 159

free/preferential trade betw many c's usually on regional basis

Answer 160

complementary ecos --> type of goods AUS exports **(commodities from resource-based industries) heavily demanded** in **industrailising nations** of **SE Asia** * conversely, SE Asia **export goods AUS cant produce competitively** eg. **simply trasnformed manufactures produced in labour-intensive industries**

Answer 161

**ASEAN-AUS-NZ** FTA * multilateral TA, **2022** extended to cover **e-commerce**, trade facilitation, coop on **enviro & climate change**

Answer 162

LT beneficial but **ST** ind **firms operating in marginal, import competing industries shrink unless improvec competitiveness** * **production** in **some sectors cease bc competitively manufacturing needs high production volumes & large workforce** & **adv ecos cant comepte with low wage costs of emerging ecos**

Answer 163

**restructure ops to stay in bus**/focus **specialising in 1 aspect ofp roduction** * may consolidate **manuf processes** down to **single plant,** * **find opps for exporting (declined domestic market share)**, * adopt **new production techs to reduce prod costs, * reduce staffing lvls**

Answer 164

**force** them to develop **innocation & efficiency to compete globally** * operate **compettive dom market --> ^ investment** for **firms** that **survive** bc they **improve tech/expand**

Answer 165

**reduce price of imports used as inputs in PP** --> **lower prod costs --> more int. competitive** * why **aus agricultural industries** not as protected (removed tariffs on inputs eg. farm machinery)

Answer 166

affect **composition** of AUS **exports** * 2000s global resources mining boom AUS **commodity-focused export base** **(natural gas, minerals)**, pattern **expected** to **remain**g **at least MT** substantial **growth in EXPORT VOLUMES** * **AUS mroe integrated with global eco** * **higher prop of AUS production exported & higher prop of g&S AUS consume imported**

Answer 167

IND: * **structural u/e** ^ as **ineff firms close** * **consumers** gain access to **wider variety of goods at lower prices** FIRMS: * **import-competing industries** go **out of bus** * **lower tariffs** provide **lower input costs** for firms GVTS: * **cutting tariffs reduce gvt revenue** * **reducing protection** has adverse **political consequences** * **gvt spending on structural adjustment programs** may **increase**

Answer 168

IND * **^ job opps** in **internationally competitive sectors** FIRMS * **efficient** firms **restructure operations to compete in global markets** GVTS * **sustainable eco grwoth** should **raise revenue**

Answer 169

* u/e w/ **resturcturing of industries** & **cuts in local prodcution** * **job losses** can be **harsh** for those **worked** in those **industries long time** w/ **limited alternative job opp**ortunities esp when **overall no. ppl employed in many manuf industries has been declining** > need **retrain to develop relevant skills for current needs** * **import-competing industries most affected** with **cuts in production concentrated in regions** eg. manuf in **SA** * jobs lost in manuf sector bc **lower protection are relatively low skilled, production line jobs.** * **AUS gvt funded** many r**etraining programs** to**help redundant workers** through tariff cuts to **adapt skills** to **other industries** * **not raise total lvl u/e** but **gains & losses** from it are **distributed unevenly throughout population** - winners vs losers

Answer 170

**^ LT employment** * **lsot employment opps** should be **more than recouped by** **growth** exp by **efficient, int. competitive sectors from structural change** * as **consumers** **able to buy more goods at lwoer prices** * **wider variety** of g&s **available** * **removal of tariff** protection lowers **Domestic price** of **products** & **^ amt foreign products available** phasing out trade barriers & **opening up AUS eco to glboal markets** to **improve living standards** for ind * **quality of g&S higher bc globally comp bus enter AUS domestic markets, forcing domestic firms** to perf better * **highly comp markets encourage** greater **innovtion** as **firms** seek **differentiate** themselves **from competitors** * **domestic** **firms operating in global markets** ensures **innovations in other markets** brought **into AUS** **quickly**

Answer 171

cutting **tariffs** --> **reduce** (indirecttax) **gvt revenue** * but only minor source revenue **lvls gvt spending** * gvts may need to **assist structural adjustment** process through **^ expenditure on u/e benefits** & **retraining programs** to aid ppl who **lsot job** * sometimes provide **financial support** to **some industries** to assist w/ adjustment process eg. indsutry-specific training gvts affected by **political consequences** of **tariff reductions** * **costs** of lwoer protection **highly visisble** - **structural u/e, closure of factories & bus, damage to eco of regional AUS** * **benefits less visible bc spread across eco & take long time** * gvts **many countries reluctant to reduce protection lvls & recently increased them**

Answer 172

impact on **eco growth** & **standards of living!!!!** * **ST ^ u/e** bc **^ imports dont create jobs/incoem in AUS**, --> **neg for LS** in **ST** * in **LT** as **resources** eg. labour, capital **move** to **mroe productive areas of eco** w/ **higher rates of return, eco growth & LS** should improve * **lower protection** lvls in **recent decades** generally critical factor causing **AUS stronger eco performance** * in **ST**, sig effects on **AUS' trade performance** & **CA DEFICIT** , **ca BALANCE LIKELY worsen** as **imports rise** bc **some** imports will be **cheaper** due to lwoer tariffs & quotes/**higher quality** than local products * BUT **lower protection** should **improve international competitiveness & CA over LT as exports grow** * benefits grow **over time**, so AUS did over **3 decades than w/ small no. large cuts** * many **trade lbieralising measures** implemented through **FTAs** phased in **gradually** to **help indsutries adjust** to **changing bus conditions** * **S-MT problems** of reducing protection **far outweighed by LT benefits** but **gradual** phasing out **easier to manage structural changes**

Answer 173

when other countries put **tariffs on AUS g&s, AUS exports** become **less competitive** in their **overseas markets** * if **other countries subsidies their exports, raise supply & reduce price of the goods on global markets** --> **AUS** exporters **sell similar products on global markets** **income reduced** * **internaional protectionism reduces AUS output** * **reduction** in **global protection lvls** should **^** AUS' **national income** * as **small eco w/ high lvl agri trade, AUS suffers disadv** from **protectionist policies** of o**ther nations & trading blocs** * **EU** several decades **heavily subsidied agri production** through **Common Agricultural Policy**, absorbs 1/3+ of EU's budget * **AUS farmers competing in global markets** at **sig disadv** to counterparts in rest of **industrialised world** (farmers receive subsidies) * **polies** of **other major export markets** **besides developed countries** eg. **FTA w/ China lifted AUS' wine exports** but **China imposed tariffs** major damange to AUS **iwne industry**, **forced ot divert products to other markets**

Answer 174

**slow** ^ protectionist measures around world * however **agri trade** remained **more protected than other industries** **throughout several decades of trade liberalisation** * **most protectionist agri trading nations took adv** of complex **loopholes in WTO regulations** to **avoid freeing up agri trade**

Answer 175

fewer * **mining & resources** sector **largest shareo f AUS exports** face very **few trade barriers (coal, oil, natural gas, iron ore) in high demand worldwide** --> **mining companies likelier** face e**xport restrictions from AUS gvt to secure energy supplies for domestic eco than** from **foreign gvt trying to protect their minerals & resources industries** * **countries importing** AUS energy & minerla resources **often dont have own resources to produce domestic alternatives** * if foreign gvt imposed tariffs on AUS resource exports, **raise costs for own consumers & bus** - **many countries dont have a domestic resource sector to protect from trade**

Answer 176

**few** * substantial reduction in industrial tariffs in recent decades negotiated through **multilateral & bilateral agreements** * **msot industrialised ecos** have **low manuf tariffs (eg. AUS) ** * some **AUS exporters** say **non-tariff barriers** to trade eg. **licensing rules greater role creating barriers** eg. **inconsistent health regulations for processed food** products in **diff areas of country diff** for **AUS exporters to penetrate foreign markets --> why technical barriers to trade formally part of trade negotiations at WTO & bilateral TAs**.

Answer 177

most * trade in services often not feasible bc **natural barriers** caused by **geographu, transport costs, language differences, local tastes & preferences** rather **than protectionist trade policies in other countries** eg. **market** for **restaurant customers limited to ppl living in/visitng AUS** **diff to export services besides tourists** hwo make up **very small prop of global consumer market for food)**

Answer 178

* reducing * **main barriers** not tariffs but **gvt regulations restrict services trade** * many countries' **protect banking sectors by restricting licenses for foreign banks --> limits expansion of Aus financial services industry in overseas markets** * **competitive AUS firms** in **electricity, communications industries** face many **overseas markets dominated by monopoly gvt providers/ procurement arrangements favour local providers** * international barreirs to AUS services trade **costly esp restrictions on establishing commercial operatiosn in Asian markets** (esp for AUS financial services)

Answer 179

policeis & procedures for purchasing g&S for gvt & public trading enterprises to use

Answer 180

* **financial services** --> **restrictions on foreign ownership** of banks & other **FIs** * **transport** services --> restrictions on **no. flight routes** in anonother country * **utility services --> gvt monopoly provides electricity, gas, water** * **professional** services --> licensing laws **only recognise own country's edu qualifications** * construction services --> gvt procurement rules that mandate use of local suppliers

Answer 181

* outlook for **global trading enviro** in **2020s more uncertain** than for several decades * increasing **tension betw US & cHINA OVER TRADE DESTABILISED GLOBAL trading system** --> knock on effects for **small open ecos** like AUS * **WTO's role in global trading system weakened** * **COVID & war in Ukraine** strengthened **protectionist sentiment** overseas & in AUS --> likely trirggered **structural changes** in eco * ^ focus on **'net zero' transfromation of ecos** growing priorities for ecos, --> likely **fossil fuel energy markets decline** --> affect **AUS trade patterns** in coming yrs

Answer 182

* **slowing** pace of **globalisation** * elevated **political tensions** in **Indo-Pacific** region * **shortages** of **skilled workers** * **population growth** in **cities & regions** * **ageing** population * growing **middle lcass** of **China & India** * automation & **digital eco**nomy * **falling prices** of **manufactured goods** * **policies** to reduce emissions & address **climate change**

Answer 183

mining (minerals and metals) * rising **trade tensions w/ China** pose some **risk** to mining **exports** but **few alternative reliable sources elsehwere** * **production capacity** **continues ^ bc large-scale mining construction projects** completed recent yrs * **global shift away from coal** likely **reduce** AUS coal **exports** rapidly coming yrs but **other commodities eg. iron ore remain strong bc no substitute available** * **natural gas 'transition' source of energy** c's to **reduce emissions (gas support **demand for LNG exports S-MT** * **global demand** for **electric vehicles ^ demand for lithium** (**battery** production) --> **AUS** wolrd's **largest lithium exporter**

Answer 184

mixed * **global food prices increased** significantly **recent** years --> **^** **farm incomes** * return of AUD closer to historic avgs made **farming exports more competitive** * AUS agri faces major **LT challenges**: * extreme **weather patterns from climate change** * **^ drought, bushfires, floods** **threatens livestock** * **access** to **overseas markets** affected by **trade barriers** & **^ lvls of agri effeiciency among competitors** * **processed food indutries** that **add value to trad agr (wine, dairy**) **greater role in exports** as **afford**ed greater **market access under AUS' recent TAs** **than trad** areas of agri * **global market for high quality processed foods** **expected** continue **growth** coming yrs fuelled by **growth of middle classi n China & India**

Answer 185

although **gradual reduction** in older, **import-competing manufacturing sector**, simultaneously **smaller, export-oriented** **manufacturing** has **continuedto grow** at **slower pace** as **specialsied manufacturers** **expand** their **markets** by producign **high quality goods** aimed at specific **market niches** * **futrue shifts in ER** alos important for **future competitiveness** of AUS manufacturers * **stronger AUD** make **domestic** manufactuers **less competitive in global markets** while weaker AUD would help them perform in global markets

Answer 186

* fell sharply after COVID but **by 2023 (except travel) recovered to pre pandemic lvls** * **recovery** in tourism **held back by limited capacity on overseas routes & ongoing high costs** for **airfares** & **accommodation** * **international edu but** facing **restrictions on growth (albanese gvt** imposed **caps on international student enrolments concerned housing shortages)** other key areas of services exports: * **digital services:** **info & comms tech/digital g&s 4th largest export** * **enviro services: LT growth potential** eg. **renewable energy sector,** historically aus **innovator** * other sector exports **may grow:** **professional, financial services** and **services related to infrastructure**

topic 1 the global economy Flashcards

(210 cards)