YIJC 2024 JC2 H2 Prelim Essay Q6 Suggested Answer

1 | P a g e Prelim Essay Q6 – International Trade & Globalisation Amidst global economic slowdown and rising unemployment, there is growing dissatisfaction with free trade, globali sation, and increasing protectionism of some countries. a. Explain the reasons for the rise in protectionism in some countries. [10] b. Discuss whether the use of policies promoting greater free trade is the best strategy for Singapore to improve her balance of trade amidst rising protectionism in the globalised world. [15] Suggested answer for part (a): Question Analysis Command Explain the reasons – Use economic reasoning to explain Content Rise of protectionism (Reasons for Protectionism- Choose 2) - Infant Industry Argument - Protect domestic production and employment using sunset industry argument - Protection against dumping - Protection to align environmental and social standards Context Some countries 1st Requirement: Reason 1 for the rise in protectionism – Costs of globalization, i.e., l oss of comparative advantage , rise in structural unemployment and deterioration of trade balance 2nd Requirement: Reason 2 for the rise in protectionism – Explain the benefits of protectionism in improving trade balance and protecting domestic industries. Introduction Protectionism refers to economic policies or practices that governments use to protect their domestic industries from foreign competition. Common tools of protectionism include tariffs, quotas, and subsidies. In recent years, rising dissatisfaction with free trade and globalization has prompted some countries to ad opt protectionist measures, driven by factors such as loss of comparative advantage, rising structural unemployment, and efforts to protect domestic industries and improve trade balances. 1st Requirement: Reason 1 for the rise in protectionism – Costs of globalization, i.e., Reducing the impact of loss of comparative advantage, rise in structural unemployment and deterioration of trade balance • Loss of Comparative Advantage: Some developed countries, such as the United States, have experienced a loss of comparative advantage in various sectors due to

2 | P a g e increased competition from developing economies like China and Vietnam. These countries often have lower labour costs, attracting foreign direct investment (FDI) and outsourcing from developed countries. As domestic industries become less competitive, loca l firms may close down or shift operations abroad, leading to job losses. Eg: The U.S. has experienced a loss of comparative advantage in electronics manufacturing, as companies like Apple outsource production to China, which offers lower labour costs and an efficient supply chain. Similarly, U.S. automobile manufacturers have faced competition from Japanese, South Korean and Chinese manufa