SAJC 2024_H2 Econs_International Trade_Lecture Notes_Students_Uploaded

ST ANDREW’S JUNIOR COLLEGE JC2 H2 ECONOMICS 2024 Globalisation and the International Economy In this theme, students will use concepts, theories and principles from earlier themes to examine the problem of scarcity and the concept of trade-offs at the broader level of International Economics. Before this, we have examined the macroeconomic aims, issues and policies relating to growth, inflation, unemployment, exchange rates, balance of trade and income distribution, with particular reference to the Singapore context. The key focus is on governments as economic agents, while recognising that the extent and type of government intervention differ among economies. This theme provides an overview of the workings and linkages of the international economy, which allows students to examine Singapore’s position in the global economy and the impact of globalisation on the Singapore economy; the impact of external trends a nd developments on the national, regional and international economies, and their implications. Important concepts and tools and analysis  Globalisation  Free trade  Protectionism: Tariffs and non-tariff measures  International and reginal economic co-operation Key questions to consider 1. Why do countries engage in free trade? 2. What is protectionism and why do countries engage in it? 3. How do countries engage in protectionism and what are the benefits and costs of doing so? 4. How do countries engage in economic co-operation and trade agreements and what are the benefits and costs of doing so? 5. What is the globalisation and what are the factors that drive it? 6. How does globalisation benefit or harm different economic agents and the economy?

St. Andrew’s Junior College Economics Department 2024 2 Contents Important concepts and tools and analysis .............................................................................................. 1 Key questions to consider ........................................................................................................................ 1 1. International trade .......................................................................................................................... 4 1.1. Basis for trade ......................................................................................................................... 4 2. Theory of Comparative Advantage (Supply factor affecting trade)................................................... 4 2.1. Numerical Illustration of the Theory of CA .............................................................................. 5 2.2. Evaluation of the Theory of CA ............................................................................................... 8 2.3. Sources of Comparative Advantage..............................................................