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AQA A2 Economics Unit 4 - June 20th

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Reply 220
I really hate EU context what are you support to deal with it??
Original post by krauja
So globalisation happens when economic integration between countries increases free trade and reduces protectionist measures...is this right??


Err...partly. It's better known as the 'death of distance'. You'd be naive to suggest it reduces protectionist barriers, because it's a load of *******s. I prefer to think of it as greater reliance on other factors and the downing of the nation state, as we saw during the global financial crisis, because money's moved all around the world so quickly, nothing is certain. It's all one big bubble and loads of numbers.

China and the USA are pretty much at war over trade issues. The USA accuses China of being protectionist by buying loads of US dollars to keep the real value of the Renminbi low. On the other hand, China accuses the United States of keeping their currency low by using quantitative easing measures.

The USA recently whacked a 30% tariff on Chinese imported solar panels because they said production was subsidised by the Chinese government. Furthermore, the USA uses very strong protectionist barriers to protect their steel industry.

Away from the big two, and Japan uses technicalities to stop excessive imports, with strong testing to meet their health and safety standards. Basically, if they don't want something, they'll find something they don't like about it, which doesn't meet their specs, or they'll hit the product until it breaks, another way of protecting their firms.

Furthermore, there are heavy bans on African imported manufactured goods right across the developed world, most notably in America and the EU. The recent Doha round of the WTO failed to achieve a solution to allow African countries to trade more freely - this is desperately contributing to their poverty issues and it has been noted that a 1% increase in trade will life more Africans - mainly in sub-saharan Africa we're talking about here- out of poverty than a 5 fold increase in international aid.

Here's a nice article about the US-Chinese trade war. http://www.selfdirectedinvestor.com/article/201010/chinese-official-accuses-u-s-of-currency-manipulation-chineseofficial.htm/

So as you can see, it would be wrong to suggest there would be more free trade as a result of globalisation. I prefer to see it as a 'shift', with the emergence of more markets, therefore factors of production, opportunities etc to create wealth. But states still very much do protect their industries. In fact, GB gave Vauxhall a massive subsidy to keep production here in the UK last year in Luton and Ellesmere Port, Cheshire.

There will always be protectionism, and as we enter more economic uncertainty, it will only increase. There is certainly more reliance, but it I wouldn't class it as free trade, trade certainly, but it is not entirely, in fact, I'd argue, hardly, 'free trade'.

Sorry about the rant. Hope this has helped anyone looking at free trade/protectionism/globalisation.
Reply 222
Apart from helping
- helping to reduce imports and dumping
- protecting infant and old industries
- generating income for government

What other benefits are there for protectionism?
Reply 223
Original post by xXACEXx
Apart from helping
- helping to reduce imports and dumping
- protecting infant and old industries
- generating income for government

What other benefits are there for protectionism?


- Krugman's strategic trade theory (closely related to the infant industry argument) it argues that comparative and competitive advantage are not natural. Governments try to create competitive advantage by nurturing strategically selected industries or sectors. So this justifies protecting the industry while comp advantage is built up. The skills build up in this sector and spill over etc. Strategic trade theory also argues that protectionism prevent monopoly exploitation by foreign monopolies.

- Agricultural efficiency Monoculture erodes efficiency and destroys comparative advantage that existed before specialisation, decreasing returns to scale weaken the case for specialisation

- Changes in demand or cost conditions Over sepcialisation causes a country to become vulnerable to sudden changes in demand or to changes in the cost and availability of imported raw materials

- Dermerit goods and bads drugs guns etc

- Self-sufficiency in times of war political unrest etc

- Employment
(edited 11 years ago)
Reply 224
Original post by ilovecatsforlife
Err...partly. It's better known as the 'death of distance'. You'd be naive to suggest it reduces protectionist barriers, because it's a load of *******s. I prefer to think of it as greater reliance on other factors and the downing of the nation state, as we saw during the global financial crisis, because money's moved all around the world so quickly, nothing is certain. It's all one big bubble and loads of numbers.

China and the USA are pretty much at war over trade issues. The USA accuses China of being protectionist by buying loads of US dollars to keep the real value of the Renminbi low. On the other hand, China accuses the United States of keeping their currency low by using quantitative easing measures.

The USA recently whacked a 30% tariff on Chinese imported solar panels because they said production was subsidised by the Chinese government. Furthermore, the USA uses very strong protectionist barriers to protect their steel industry.

Away from the big two, and Japan uses technicalities to stop excessive imports, with strong testing to meet their health and safety standards. Basically, if they don't want something, they'll find something they don't like about it, which doesn't meet their specs, or they'll hit the product until it breaks, another way of protecting their firms.

Furthermore, there are heavy bans on African imported manufactured goods right across the developed world, most notably in America and the EU. The recent Doha round of the WTO failed to achieve a solution to allow African countries to trade more freely - this is desperately contributing to their poverty issues and it has been noted that a 1% increase in trade will life more Africans - mainly in sub-saharan Africa we're talking about here- out of poverty than a 5 fold increase in international aid.

Here's a nice article about the US-Chinese trade war. http://www.selfdirectedinvestor.com/article/201010/chinese-official-accuses-u-s-of-currency-manipulation-chineseofficial.htm/

So as you can see, it would be wrong to suggest there would be more free trade as a result of globalisation. I prefer to see it as a 'shift', with the emergence of more markets, therefore factors of production, opportunities etc to create wealth. But states still very much do protect their industries. In fact, GB gave Vauxhall a massive subsidy to keep production here in the UK last year in Luton and Ellesmere Port, Cheshire.

There will always be protectionism, and as we enter more economic uncertainty, it will only increase. There is certainly more reliance, but it I wouldn't class it as free trade, trade certainly, but it is not entirely, in fact, I'd argue, hardly, 'free trade'.

Sorry about the rant. Hope this has helped anyone looking at free trade/protectionism/globalisation.


Free trade doesn't exist. This is a brilliant book if you are interested in these kind of things http://www.amazon.co.uk/Things-They-Dont-About-Capitalism/dp/0141047976/ref=tmm_pap_title_0
I'd recommend people to use these tutor2u presentations by the way, still a good 3 days to go, you could probably get through them all in a day. They're really helpful and provide you with stuff that revision guides don't give you. They show shifts in graphs after every point, when necessary. Really useful! They can get a bit long winded, so you can breeze through some. :smile: http://www.tutor2u.net/economics/presentations.html
Original post by Tateco
Free trade doesn't exist. This is a brilliant book if you are interested in these kind of things http://www.amazon.co.uk/Things-They-Dont-About-Capitalism/dp/0141047976/ref=tmm_pap_title_0


I'm not so into it, but my I've learnt a fair bit for this exam as I feel the rise of China v USA could lead to a trade/no trade question coming up in the global context. And I'm not certain a euro (as in the currency) question will come up because so many people think it will. Usually, when so many people think something, it never comes up in that exam.

I disagree, wouldn't say it doesn't exist at all. But, I do largely agree. I mean look at the EU, there are fairly high levels of free trade. I could go to Poland tomorrow, set up a factory, make chocolate and sell it in Belgium, France and Hungary fairly easily. This is the simplest argument

The same way a foreign firm can come here, make cars and export them to mainland Europe, which is what a lot of firms do, e.g. Nissan, Vauxhall etc. But as said, they're subsidised to come here etc. so then it gets technical as to the differing views of 'free trade'.
Reply 227
Original post by ilovecatsforlife
I'm not so into it, but my I've learnt a fair bit for this exam as I feel the rise of China v USA could lead to a trade/no trade question coming up in the global context. And I'm not certain a euro (as in the currency) question will come up because so many people think it will. Usually, when so many people think something, it never comes up in that exam.

I disagree, wouldn't say it doesn't exist at all. But, I do largely agree. I mean look at the EU, there are fairly high levels of free trade. I could go to Poland tomorrow, set up a factory, make chocolate and sell it in Belgium, France and Hungary fairly easily. This is the simplest argument

The same way a foreign firm can come here, make cars and export them to mainland Europe, which is what a lot of firms do, e.g. Nissan, Vauxhall etc. But as said, they're subsidised to come here etc. so then it gets technical as to the differing views of 'free trade'.


Sorry I meant free market, which is slightly different. The problem is that when governments say they are deregulating in some areas they are actually manipulating the system to favour that market compared to others. The whole system is too complex for there to be such a thing IMO.
Reply 228
one more thing, im currently revising economic integration. does the EU count as an example of the 4th stage (singles market) AND 5th - EMU?
Original post by Tateco
Sorry I meant free market, which is slightly different. The problem is that when governments say they are deregulating in some areas they are actually manipulating the system to favour that market compared to others. The whole system is too complex for there to be such a thing IMO.


Yeah, I entirely agree with you :smile: Tbh, I've checked my guide, and it says globalisation is linked to increases in free trade, so I reckon there are arguments for an against, would love a protectionism question. Pretty sure it's been a good 4 or 5 papers since the last one :biggrin:

Well, I swear I saw it in the past papers, but just checked and couldn't see it. Still think it's interesting to talk/know about regardless of whether it comes up
(edited 11 years ago)
Reply 230
Original post by sweetascandy
Okay, thank you so much for that! But I don't understand your point about overspecialisation at the bottom of the page :s
Tried to +rep you but I've ran out :sadnod:



It's never too late to start :cool:
(...Actually, yes it is :shh:)
I've also got 3 hardcore exams next week. Thing is, although economics may seem the easiest to 'blag' your way out of, it's actual vital to practice writing essays. I give that advice to myself first and foremost :sigh: So bored of revision... And the worst thing is that I haven't even done that much! :sadnod:


I think the most worrying thing about this unit is definitely the international concepts and the in depth nature of the exchange rate etc... the rest of the stuff is really overlapped with unit 2... still need to go in-depth with regards to globalisation and exchange rates though!
Can someone please explain the whole concept of NAIRU to me pleeease? :please: :redface:
Is there any need to balance a budget when it's in surplus?

And what are some of the positive impacts of balancing a budget i.e. cutting back expenditure.

I can only think of long term benefits but not short term ones..
Original post by Super Mario 64
Is there any need to balance a budget when it's in surplus?

And what are some of the positive impacts of balancing a budget i.e. cutting back expenditure.

I can only think of long term benefits but not short term ones..


1) No there's no need to balance a budget if it's in surplus. If anything, that's what governments should strive towards, because it means it hard times, there's plenty there to stimulate an economy. Many governments have surpluses when there is strong economic growth.

2) Lower interest rates on government debt. - but this is likely to be only when rates of interest are around 4% or more, hence I disagree with the current coalition's PSNCR reduction plan, it doesn't make sense, GB still pays low interest, and it would be uch better to cut back once the economy has recovered and is recovering at 2% or so. That's the main short term ad I can think of, the rest are long term.
What are the actual effects of FDI in an economy? Yeah sure, it will boost econ growth but can anyone actually explain why? O_o

These kind of questions seem so obvious but it's just so hard to get them into words :-/
Reply 235
Original post by Super Mario 64
Is there any need to balance a budget when it's in surplus?



Original post by ilovecatsforlife
1) No there's no need to balance a budget if it's in surplus. If anything, that's what governments should strive towards, because it means it hard times, there's plenty there to stimulate an economy. Many governments have surpluses when there is strong economic growth.




You could argue that when the government has a budget surplus, they are actually holding back on spending when they could be increasing welfare and standards of living. e.g. that money could build a new hospital.
Original post by _becca
You could argue that when the government has a budget surplus, they are actually holding back on spending when they could be increasing welfare and standards of living. e.g. that money could build a new hospital.


Thank you!

Also, what's the deal with QE3? Is it happening or not?

What were the initial effects of QE1 and 2? All I've found is that inflation rose..


This was posted from The Student Room's iPhone/iPad App
Reply 237
I have read somewhere that this exam was written ~18 months ago by the examiners. With this in mind, what topics are people anticipating?

Also, what would be a good source of info for cramming lots of notable news info for the past few months. Particularly looking at a summary of the eurozone crisis, and anything else relevant. Some little facts, figures for placing into the essays would be nice!
Reply 238
Hey all, does anyone possibly have good real world examples to include in unit 4 that they would like to share?
I would normally carry out research myself but I have been so busy with other exams, I have another 3 left. Any help is very much appreciated.x
Reply 239
On the topic of inflation, I'd like to suggest a few evaluation points that bring you into the top tier, and they're pretty much to be used if you ever talk about inflation and the measurement.

- Inflation is often 'over-cooked' by government, where the true rate of inflation is a lot higher than what the headline inflation rate states. Particularly early last year, the jump in commodity prices meant that speculators began to become concerned with the reliability of the data, and there was, in effect, imperfect knowledge in the distribution of inflation figures globally.

- Inflation has seen a rise in a few new measurements, which have proved to be important in the definition of inflation inertia. Primarily, median inflation rate, the trimmed-mean, and core inflation. As a result, the true impact of inflation, and whether it is better than deflation, is partially determined to how the inflation rate is measured.

- The core inflation rate is also thought to be a good indicator of the impact of such. As this is effectively a basket of goods with food and energy withdrawn, both Prof Krugman and Ned Phelps agree that inflation rates are self-perpetuating, and that not every price in the economy is determined by market forces. Since this paper is synoptic, you can mention that a lot of prices are set by oligopolistic firms or negotiated via long-term contracts. Conclusively, whilst inflation could be seen as better than deflation, the disinflation of the 1980s suggests that inflation is 'embedded' in the economy, as long as there is not large fluctuations of demand and supply.

These are really high-end evaluation marks that are for people who are aiming for the A*. They are a little tricky to understand, but in an inflation question, it would be favourable with examiners to mention that you know more than just the sweeping knowledge of inflation and its advantages/disadvantages, but rather its measurement and why its impact largely depends on what sectors are looking at what measurement.

I do plan on making a large sheet of advantages, disadvantages and evaluations for each of the topics, hope this helped.
(edited 11 years ago)

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