A2 OCR Economics F585 June 2016

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?

I wouldn't speculate, at this stage you need to try to be ready for any topic in the pre release

Reply 401

Pato1

13

I really need the f585 2015 paper to see what came up, anyone got it please post

Reply 402

Cocopops121

8

Original post by lifeonmars678

Can anyone help with answering this question:

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

Thank you!

Hey this would probably come as a 10 marker.

Knowledge:
Economic development definition

One one side:
Public sector investment would mean more investment by private firms such as MNC. So more FDI means more job creation in the economy leading to more employment. Increasing disposable incomes and hence more able to afford good quality and quality of good therefore high stand of living and high development.
Secondly, public sector investment into improving clinics and education will mean more better facilities. Improving quality, hiring more doctors and teachers therefore more healthcare and education access for Zambian citizens. Hence development.

On the other hand,
However resource nationalisation(Zambian government taking profits from firms and control into their hands) has halted private sector investment as shown in fig 5.1, it fell and went into negative digits. Hence discouraging FDI to invest into Zambia, therefore not significant in promoting development.
Secondly, private sector investment can be for personal profit and mnc can take the profits back to their country and avoid paying taxes to the Zambian government. Leakages in Zambian economy, also mentioned mnc only pay 10% tax revenue which means tax avoidance so not helping Zambian development but rather making it difficult ( due to less govt tax revenue)

Conclusion,
It is important if tax is collected properly from these firms and overall private sector investment will bring development as SOL will be improved.

Hope it helps xxx

Reply 403

Cocopops121

8

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?

Um this is too much for a four marker, bur anyway.

Global growth will mean economies globally experiencing growth hence high GDP and more production etc etc. Primary product dependent countries are providing raw materials such as copper which are needed for manufacturing. So when there's global growth there's more means for demand for manufacturing products hence more demand of primary commodities hence such developing countries will experiences more export led growth or even improvement in TOT.

Hope it helps xxx

Reply 404

Cocopops121

8

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?

You can also say, economies that are experiencing growth will try to expand their businesses hence come to developing countries as MNCs so create employment in the developing country and do investment.

Reply 405

itisrising

1

I'm still rather confused about extract 3. Can anybody summarise it for me?

Reply 406

thelion786

7

Original post by Cocopops121

Um this is too much for a four marker, bur anyway.

Global growth will mean economies globally experiencing growth hence high GDP and more production etc etc. Primary product dependent countries are providing raw materials such as copper which are needed for manufacturing. So when there's global growth there's more means for demand for manufacturing products hence more demand of primary commodities hence such developing countries will experiences more export led growth or even improvement in TOT.

Hope it helps xxx

Thank you very much! It does seem long for a 4 marker, it was on the EconPlusDal model answers. It is much clearer now.

Reply 407

thelion786

7

Original post by Cocopops121

Hey this would probably come as a 10 marker.

Knowledge:
Economic development definition

One one side:
Public sector investment would mean more investment by private firms such as MNC. So more FDI means more job creation in the economy leading to more employment. Increasing disposable incomes and hence more able to afford good quality and quality of good therefore high stand of living and high development.
Secondly, public sector investment into improving clinics and education will mean more better facilities. Improving quality, hiring more doctors and teachers therefore more healthcare and education access for Zambian citizens. Hence development.

On the other hand,
However resource nationalisation(Zambian government taking profits from firms and control into their hands) has halted private sector investment as shown in fig 5.1, it fell and went into negative digits. Hence discouraging FDI to invest into Zambia, therefore not significant in promoting development.
Secondly, private sector investment can be for personal profit and mnc can take the profits back to their country and avoid paying taxes to the Zambian government. Leakages in Zambian economy, also mentioned mnc only pay 10% tax revenue which means tax avoidance so not helping Zambian development but rather making it difficult ( due to less govt tax revenue)

Conclusion,
It is important if tax is collected properly from these firms and overall private sector investment will bring development as SOL will be improved.

Hope it helps xxx

Do you mean more public sector investment in infrastructure, which then means more FDI? Or can public sector investment come from private firms?

Reply 408

Pato1

13

comparative advantage, trade creation/diversion came up as 10 markers last year so they won't come up for 10's this year

Reply 409

keynes24

10

Original post by itisrising

I'm still rather confused about extract 3. Can anybody summarise it for me?

Check the data/table and look at the concepts involved. Terms of trade, primary product dependency. HDI

Reply 410

keynes24

10

Original post by Cocopops121

Hey this would probably come as a 10 marker.

Knowledge:
Economic development definition

One one side:
Public sector investment would mean more investment by private firms such as MNC. So more FDI means more job creation in the economy leading to more employment. Increasing disposable incomes and hence more able to afford good quality and quality of good therefore high stand of living and high development.
Secondly, public sector investment into improving clinics and education will mean more better facilities. Improving quality, hiring more doctors and teachers therefore more healthcare and education access for Zambian citizens. Hence development.

On the other hand,
However resource nationalisation(Zambian government taking profits from firms and control into their hands) has halted private sector investment as shown in fig 5.1, it fell and went into negative digits. Hence discouraging FDI to invest into Zambia, therefore not significant in promoting development.
Secondly, private sector investment can be for personal profit and mnc can take the profits back to their country and avoid paying taxes to the Zambian government. Leakages in Zambian economy, also mentioned mnc only pay 10% tax revenue which means tax avoidance so not helping Zambian development but rather making it difficult ( due to less govt tax revenue)

Conclusion,
It is important if tax is collected properly from these firms and overall private sector investment will bring development as SOL will be improved. A 10 mark question doesn't require a conclusion either.

Hope it helps xxx

Public sector investment is capital expenditure by the government NOT private firms like FDI and public sector investment is not the same as resource nationalisation.
Public sector investment could lead to better infrastructure like schools and hospitals, greater access to basic necessities. It could also lead to more employment compare to the private sector due to less profit motive. The problem with greater public sector investment is the issue with financing it (national debt) and the possibility of discouraging private sector investment (crowding out).