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A2 OCR Economics F585 June 2016

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Reply 380
Avatar for Pato1
Pato1
13
Original post by flairs
How many supply side reforms will you talk about?


Intro of Zambia's policies/problems and definitions

2:
- Poor infrastructure + why reforming it will boost LR economic growth
- Deregulation; why deregulation will create LR economic growth

2 On the other hand;
- VERY expensive for Zambia and they don't make much on tax receipts
- Not guaranteed to work + why, also you need other policies not just SS. Such as fiscal and monetary policy (as knowledge)

final judgement:
Yes SS reform is necessary but also mention problems
Reply 381
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Pato1
13
20 mark essay compilation:

Gconomics/Econplusdal:
'Discuss whether reforms to the Supply-Side to the economy are key to promoting long run economic growth in Zambia;

Gconomics:
'Discuss the challenge to Zambia's long run economic growth potential'

Gconomics:
'Discuss how effective the Zambian government has been in it's attempt to promote long run economic growth in Zambia'

APT mock:
'Discuss the extent to which Globalisation is the key to economic growth in developing nationals, such as those in extract 1'
Can anyone help with answering this question:

To what extent can public sector investment contribute to Zambia's economic development?

Thank you!
"Explain how developing countries dependent on primary commodities benefit from an increase in Global Growth" (4 marks).

Could somebody please explain something to me, if there is global growth surely there would be less demand for commodities as according to the Prebisch-Singer Hypothesis and increase in incomes creates a greater demand for value added goods rather than commodities due to the income elasticity of demand.

Therefore, in what way does global growth help developing countries who specialise in primary commodities?
has anyone got any 20 mark essay plans that they would like to share? would be a great help
Reply 385
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Pato1
13
Original post by thelion786
"Explain how developing countries dependent on primary commodities benefit from an increase in Global Growth" (4 marks).

Could somebody please explain something to me, if there is global growth surely there would be less demand for commodities as according to the Prebisch-Singer Hypothesis and increase in incomes creates a greater demand for value added goods rather than commodities due to the income elasticity of demand.

Therefore, in what way does global growth help developing countries who specialise in primary commodities?


Increase in global growth = more fdi in developing nations = less unemployment and more tax to the government. FDI can take them to the secondary and tertiary sectors too.
Would it make sense to write about resource nationalisation as a supply side reform for the 20 marker?
Original post by thelion786
"Explain how developing countries dependent on primary commodities benefit from an increase in Global Growth" (4 marks).

Could somebody please explain something to me, if there is global growth surely there would be less demand for commodities as according to the Prebisch-Singer Hypothesis and increase in incomes creates a greater demand for value added goods rather than commodities due to the income elasticity of demand.

Therefore, in what way does global growth help developing countries who specialise in primary commodities?


commodities are not inferior goods, global growth will lead to a rise in both manufacture goods and primary goods the only difference is that the demand for manufacture goods should increase more than proportional compare to primary products
Original post by ingeniousrn
Would it make sense to write about resource nationalisation as a supply side reform for the 20 marker?


No, privatisation is a supply side policy. Nationalisation is the opposite.
Original post by Pato1
Increase in global growth = more fdi in developing nations = less unemployment and more tax to the government. FDI can take them to the secondary and tertiary sectors too.


if the question refers to primary products the analysis should be based on that. More employment (labour intensive primary sector) , more foreign currency, I don't think FDI is a good point unless it is linked to primary products.
Original post by Pato1
Increase in global growth = more fdi in developing nations = less unemployment and more tax to the government. FDI can take them to the secondary and tertiary sectors too.


That makes sense. How do primary commodities involve themselves, or is it just through the nation moving to secondary sectors?

It would be wrong to say that there would be a boost in the nations exports right, because thats what it says in the EconPlusDal guide, which I disagreed with and hence came here
Original post by keynes24
No, privatisation is a supply side policy. Nationalisation is the opposite.


Okay, so in terms of supply side reforms, does it make sense to focus on the development of economic zones, investment in infrastructure (e.g better power supply) and development of financial institutions
This would be my structure. I amnot too sure how much marks this will get though, so please leave anysuggestions for improvements. This is using a mixture of Econplusdal G conomicsand the APT's resources

1 - definition of long run growth and supply sidepolicies. I would throw in FDI here too, but not necessary.
2 - explain why supply side isneeded. Do alter this to reason which are mostly mentioned in your argumentbelow. ( i am using the issue of high inflation at 6.5%, dependency on copperprimary commodity issue and "lack of infrastructure" includingroad, railways,etc.

3 - Spendingon infrastructure >> attracts new FDI and new business>>reduces there costs>>> more productive efficiency>>>LRAS shifts right. *insert diagram here* and this can also deals with theinflation problem . Also as extra talk about the poor power supply, thusinvesting in this can also increase attractiveness. (FACT, 90% of Zambia'spower supply in from hydro-electric, which is vulnerable)

4 - DEREGULATION -essentially a similar argument from above as it attracts for FDI and smalllocal businesses. (done through reduction is red tape or otherlegal stuff....) I wouldwrite here that for this to be effective, it has to be a significant amountcompared to other local developing countries.

5- Use of EconomicZone ->> can help move away from the dependency from exports of copperand imports of raw material to other industries. There are further benefitshere.. primary commodities are volatile blahblah...

6 - FUNDING ISSUE - Zambia has ineffective tax system soquestion of where the money will come from. ODA may help but Taxes may be themost likely use.

7- UNKNOWN OUTCOMES...cant predict it will happened... also issues with businesses not beingattracted by economic zone due to high corp tax after the 5 years finish.Resource nationalisation may deter FDI and small businesses.

8- INFANT INDUSTRIES - (WATCH G conomics)

JUDGEMENT
- yes it is effective inpromoting long run growth if method of taxing is made more effective.... - yes as it help move away from primary commodities dependency. however it is not enough alone, monetary policy ( Watch G conomics please) also ECONOMICS ZONES can lead to inequality between regions as it encourages firms to set up in one place. ( perhaps a solution is to create more economic zone in other regions of the country. not too sure about this point) . Sorry for the lack of detail, the page crashed and i got lazy typing it all out again. Do let me know what you please. It will be so helpful :smile:. Also if there is anything you like but may not understand because of the lack of detail, message me. G conomics link covers a lot the stuff i mentioned. https://www.youtube.com/watch?v=-WXK_aCPgnI
Reply 393
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flairs
2
Do reduction in costs of production count as shift to the right in LRAS? e.g. deregulation reduces cost of production and therefore LRAS shifts to the right?
Reply 394
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Pato1
13
Will the short answer questions always be related to questions on the markscheme keynes?
Original post by Pato1
Will the short answer questions always be related to questions on the markscheme keynes?


I don't understand your question. Short answer questions (4 marks) are usually terms from the pre release. Globalisation, FDI, remittances, ODA.....
Original post by ingeniousrn
Okay, so in terms of supply side reforms, does it make sense to focus on the development of economic zones, investment in infrastructure (e.g better power supply) and development of financial institutions


Yes or the ones already listed in extract 5
Original post by keynes24
Yes or the ones already listed in extract 5


Which other ones are mentioned in Extract 5?
Original post by ingeniousrn
Which other ones are mentioned in Extract 5?


Last page of extract 5 gives a list of things Zambia could improve such as lack of finance, excessive bureaucracy, poor infrastructure , etc.... all in bullet points
Original post by keynes24
Last page of extract 5 gives a list of things Zambia could improve such as lack of finance, excessive bureaucracy, poor infrastructure , etc.... all in bullet points


Do you think there are high chances of the 20 marker on Globalisation or would preparing answers to 20 markers on SS reforms and FDI be enough?

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