Globalisation Essay Pack

H2 Economics Globalisation Essay Pack 0 Definitions and Key Clarifications 1 1 Theory of Comparative Advantage 1 (a) The Basis of Trade: The Theory of Comparative Advantage 3 1 (b) Limitations of the Theory of Comparative Advantage 6 2 (a) Differences and Changes in Countries’ Comparative Advantage 10 3 (b) Patterns of Trade 12 2 Causes of Globalisation 4 (a) The Trend towards Globalisation 17 3 Effects of Globalisation and Trade Policies 5 (a) Macroeconomic Impacts of Globalisation I 22 6 (b) Macroeconomic Impacts of Globalisation II 31 7 (a) Microeconomic Impacts of Globalisation 33 8 (a) Types of Protectionist Measures 37 8 (b) Impacts of Protectionism 42 5 (b) Free Trade Agreements 50 9 (a) Impacts of a Trade War 54 Appendix: Global Market Diagrams A. Free Trade Diagram 57 B. Import Tariff Diagram 60 C. Import Quota Diagram 62

This document is intended as a comprehensive set of analytical points designed to answer most questions, based primarily on ideas raised in the NJC 2024 H2 Economics Chapter 15 Seminar Notes. While the primary function of this set of notes is to provide analytical answers, learning objectives are provided at the top of each essay as a study guide for content learning. 0 Definitions and Key Clarifications International Trade is defined as the transaction in goods and services between countries. ● Trade can refer to both the volume (Q X and Q M ) and value (X and M) of exports and imports. A country has a Comparative Advantage over another country in the production of a good if it can produce it at a lower opportunity cost, i.e. it has to forgo less of other goods in order to produce it. The Theory of Comparative Advantage states that trade can benefit all countries if they specialise and export the goods in which they have a comparative advantage in producing. Dynamic comparative advantage refers to a country’s comparative advantage changing over time due to changes in factor endowments. Pattern of Trade refers to the trends in the flow of goods and services between countries. It reflects which countries trade with each other, the types of goods and services they exchange, and the volumes involved. Trade liberalisation refers to the removal or reduction of trade barriers, such as tariffs, quotas, and regulations, to encourage free trade between countries. Protectionism refers to the use of tariff and non-tariff policies as barriers to free trade imposed by a government to protect domes