ACJC International Trade Answers Essay Qns 1

Question 1: 2015 A Levels “While Singapore's economic restructuring efforts have borne fruit, it is a marathon with no finish line. We are not done. I don’t think we’ll ever be done. Ten years from now, I’m sure we’ll still be talking about productivity growth and upgrading.” - Prime Minister Lee Hsi en Loong Todayonline, 11 June 2019 (a) Using examples, explain why an economy’s comparative advantage might change over time. [10] (b) Assess the measures adopted by the Singapore government to improve the economy’s global competitiveness. [15] (a) Explain why an economy’s comparative advantage might change over time. [10] Command Explain why • Provide at least 2 reasons of why comparative advantage in an economy might develop or lost over time. Concepts Theory of comparative advantage Dynamic comparative advantage Context Not given, use own examples to substantiate argument Introduction: A country’s comparative advantage is determined by its opportunity cost in production. • Define comparative advantage: A country has a comparative advantage in the production of a good/service if it incurs a lower opportunity cost compared to another country. • Differences in opportunity cost are mainly due to differences in the quantity and quality of resources for the production of a specific good. • A country will have comparative advantage in the production of good/service which uses more the resources/efficiency the country has more. A country with advanced technology will have comparative advantage in production with high technology content. • Comparative advantage is not static, it changes over time with countries having different rates of improvements in their production processes. Singapore for example has acquired its current advantage in pharmaceutical industries technology and R&D investment. Requirement 1: (Factor 1) Changing factor endowment • In the early days of industrialisation in Singapore, the country used to have comparative advantage in labour intensive industries such as food and textile production. However, with the emergence of China and other Southeast Asian countries which have abundant labour, Singapore’s comparative advantage is lost to these countries. In response to this, Siungapore has focused on developing its labour force through its education and upskilling efforts to increase the skillsets of workers. This has allowed Singapore to develop a comparative advantage in industries such as higher-end manufacturing, financial services and innovative technology. • Similarly, China can be said to have lost some comparative advantage in labour intensive production as Vietnam has developed in the abundance of low skilled labour with low wages needed for such production.

Requirement 2: (Factor 2) Differing rates of technological advancement between countries • Technological advancemen