Worksheet for 1St Week in January IGCSE2

Worksheet for 1st week in January – IGCSE2

Dear guys, please finish these off. This section deals with globalisation, trade, exchange rates and development. It’s a really cool section and, happily, mostly revision as we’ve covered a lot of it already.

1. Globalisation (Ch 42) a. Globalisation is when products are manufactured in one country and sold in another.” What is lacking in this definition? ______b. Using a previous very central concept, explain why globalising countries might have an advantage over non-globalised countries. ______c. Using specific countries as examples, explain the benefits of globalisation. ______2/13

d. Using another specific country – or countries – outline the negative aspects that might arise due to globalisation. ______

e. Look up the “race to the bottom” – why do you think this has, if fact, NOT HAPPENED?! ______

NOTE: you will be asked to evaluate globalisation! Start ranking your arguments and take a peek at the master-eval list on the wall. 3/13

2. FDI and aid (Ch 43) a. Define FDI very clearly. Note that your book confuses direct and indirect (portfolio) investment. ______b. Give three good examples of why and how govts frequently sponsor or encourage FDI. ______

c. Name and briefly outline five different forms of aid i. ______ii. ______iii. ______iv. ______4/13

v. ______

d. Outline three distinct benefits of aid. ______

e. In light of the above, give two reasons why aid in fact might be detrimental to an LDC. ______5/13

f. Look up Lord Peter Bauer and jot down three points he hold forth on the merits of aid. ______

g. What are the two main opposing points put forward in the “aid vs. trade” debate? (Yes, anther panda-dime.) ______

3. Winners and losers in globalisation (Ch 44) a. Define free trade area (FTA). ______6/13

b. Explain how Mexico benefits from being in NAFTA: ______

c. How do US FDI flows to Mexico affect the Mexican BoP? Note that there is a SR and LR issue here. ______

d. Explain how FDI inflows to Mexico affect AD – and thus Y and U. ______7/13

e. The diagrams below are for the Mexican economy. For each one, give a brief explanation and a correct diagram.

Plev (index) AS-AD, Mexico The govt of Mexico lowers profit taxes…

Plev The US govt offers tax breaks for international US (index) AS-AD, Mexico firms that invest in the US rather than abroad…

Plev AS-AD, Mexico Tricky one, think! The Mexican govt implements (index) wide-scale improvements in infrastructure along the Mex/US boarder…

Yr/t 8/13

f. Why might governments gain – e.g. the budget – from inflows of FDI? ______

g. Explain the link between FDI – AD – Y and U. ______

h. Give two clear examples of how FDI inflows to Mexico might give rise to environmental concerns. ______

i. How might US trade unions feel about FDI flows from US firms to Mexico and China? ______9/13

j. Give two examples of how FDI from MDCs to LDCs might lead to exploitation of labour. ______

k. Economic integration – e.g. FTAs – might lead to a “world business cycle”. Explain why and how this might lead to some very severe effects if a major economy goes into recession. ______10/13

l. FDI flows to LDCs can lead to worsening income equality. Explain why China has seen this in terms of cities (industrial production) and countryside (agricultural production). ______

4. International trade (Ch 45) a. Is the term “international trade” tautological? Explain. ______

b. Give three good solid reasons why countries trade. Use economic terms in your answer! ______11/13

c. How might Indonesia have an absolute advantage in the production of fruit compared to, say, the UK? A diag here might be helpful! ______

d. Trade can actually be damaging for certain countries. Explain how. Clearly outline why negative effects might arise. ______12/13

e. Once again, you need to understand the links between the exchange rate, AS-AD, Y, U and BoP (current account). Thus, explain: i. What will happen to U and Y in Indonesia if the exchange rate depreciates. ______

ii. How might current account be affected if Y in Indonesia rises drastically during a year. ______

iii. Indonesia experiences D-pull inflation – how might this affect X, M and current account? ______13/13

f. Finally, in preparation for the coming chapters on barriers yo trade (BTT), draw three diagrams below illustrating the effects of a tariff, a quota and a subsidy. You need to explain what happens to M, govt and consumers.

P (IDR) Batik in Indonesia The Indonesian govt imposes tariffs…

Q/t IB teac hers The Indonesian govt imposes a quota (use figures P (IDR) Batik in Indonesia here)…

Q/t IB teac hers

The Indonesian govt subsidises batik… P (IDR) Batik in Indonesia

Q/t IB teac hers