ACJC_H3_ECONS

ANGLO-CHINESE JUNIOR COLLEGE  2016 JC2 PRELIMINARY EXAMINATIONS ECONOMICS 9808 Higher 3 13 September 2016 3 Hours 15 Minutes Additional materials: Writing paper READ THESE INSTRUCTIONS FIRST Write your index number and name on all the work you hand in. Write in dark blue or black pen on both sides of the paper. You may use a soft pencil for any diagrams, graphs or rough working. Do not use staples, paper clips, highlighters, glue or correction fluid/tape. Section A Answer all questions. Section B Answer two questions. Begin each question on a fresh sheet of paper. The number of marks is given in brackets [ ] at the end of each question or part question. At the end of the examination, fasten all your work securely together in order. Please check that your question paper is complete. This document consists of 9 printed pages, including the cover sheet.

2 © ACJC 2016 9808/01/Sep/16 Section A Answer all questions in this section. Question 1 The Era of Digital Globalisation Extract 1: Digital globalisation and developing countries Globalization is entering a new era, defined not only by cross-border flows of goods and capital, but also, and increasingly, by flows of data and information. This shift would seem to favour the advanced economies, whose industries are at the frontier in employing digital technologies in their products and operations. Will developing countries be left behind? For decades, vying for the world’s low-cost manufacturing business seemed to be the most promising way for low-income countries to climb the development ladder. Global trade in goods rose from 13.8% of world GDP in 1985 ($2 trillion) to 26.6% of GDP ($16 trillion) in 2007. Propelled by demand and outsourcing from advanced economies, emerging markets won a growing share of the soaring trade in goods; by 2014, they accounted for more than half of global trade flows. Since the Great Recession, however, growth in global merchandise trade has stalled, mainly owing to anaemic demand in the world’s major economies and plummeting commodity prices. But deeper structural changes are also playing a role. Many companies are simplifying and shortening their supply chains. For a range of goods, automation means that production location and outsourcing decisions no longer depend primarily on labour costs. Quality of talent, infrastructure, energy costs, and speed to market are assuming greater weight in such decisions. In the near future, 3D printing could further reduce the need to ship goods across long distances. If trade in global goods has indeed peaked relative to global GDP, it will be harder for poor countries in Africa, Latin America, and Asia to develop by becoming the world’s next workshops. But globalization itself is not in retreat. While global goods trade has stalled and cross-border financial flows have fallen sharply since 2007, flows of digital information have s