Question spotting for F585 Economics The Global Economy OCR A level June 2011

Agreed that the essay question is probably going to be something like:

"Discuss the extent to which international trade agreements to reduce barriers are useful for stimulating growth in developing countries"

Here's a short list for both sides of the argument I made, with evaluative points for the conclusion:

For

Access to markets increased, demand for exports increases, AD up and so higher employment.
This leads to higher living standards, multiplier effect and less strain on gov resources to deal with poverty
More competition leads to firms more efficient so better quality and price of good so higher demand
Competition also forces firms to invest in long-term capital so increases long run productive capacity of economy (AS shifts out)
R+D and innovation, technological transfer
A more open economy attracts FDI, technology transfer leads to skilled workforce and higher human capital
Gov gets revenue for infrastructure, education,health

Bad

Increase in competition, domestic industries can't compete with economies of scale from developed, leads to unemployment, poverty as no social security in these countries
higher dependancy on primary commodities which are volatile and so more risk
Agriculture is highly subsidised by developed world (why its all gone tits up in doha)
environmental problems e.g. brazil
inequality, social resentment etc.
opening of their economies leads to dumping of subsidised products from west

Conclusion

Overall its good, opening of economy leads to larger market share for firms, so economies of scale gained and also fdi pours in as seen as untapped resource
In the short run unemployment may result from uncompetitive firms but in the long run only competitive efficient firms remain

if the Q came up off 'what is a fiscal stimulus package' as a 4marker,
what would u write???

A fiscal stimulus package is when the government either raises government spending or reduces taxes with the aim of increasing aggregate demand in the economy. This is because government spending is an injection and taxation is a withdrawal, from the circular flow.

gonna go and get a macdonalds before the exam... yeeeeee

for a 10 marker
why were the PIIGS so uncompetitive.....

Agreed that the essay question is probably going to be something like:

"Discuss the extent to which international trade agreements to reduce barriers are useful for stimulating growth in developing countries"

Here's a short list for both sides of the argument I made, with evaluative points for the conclusion:

For

Access to markets increased, demand for exports increases, AD up and so higher employment.
This leads to higher living standards, multiplier effect and less strain on gov resources to deal with poverty
More competition leads to firms more efficient so better quality and price of good so higher demand
Competition also forces firms to invest in long-term capital so increases long run productive capacity of economy (AS shifts out)
R+D and innovation, technological transfer
A more open economy attracts FDI, technology transfer leads to skilled workforce and higher human capital
Gov gets revenue for infrastructure, education,health

Bad

Increase in competition, domestic industries can't compete with economies of scale from developed, leads to unemployment, poverty as no social security in these countries
higher dependancy on primary commodities which are volatile and so more risk
Agriculture is highly subsidised by developed world (why its all gone tits up in doha)
environmental problems e.g. brazil
inequality, social resentment etc.
opening of their economies leads to dumping of subsidised products from west

Conclusion

Overall its good, opening of economy leads to larger market share for firms, so economies of scale gained and also fdi pours in as seen as untapped resource
In the short run unemployment may result from uncompetitive firms but in the long run only competitive efficient firms remain

also a fiscal stimulus question might come up i.e does it help euro areas come out of a reccision or something

something on unemployment will come up cos 1 whole extract is about wether competiviness or the goverments spending on good benefits which one is the bigger factor for unemployment spain felt.

extract 1 talks about soft curreny so i rekon something on devaluation