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9 views5 pages

GLOBAL

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eshmeet.m03
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Unit 14: International Trade - Part I

14.1 The benefits of international trade

• Greater choice for consumers


• Economies of scale
• Increased competition → efficiency
• Greater flow of ideas and technology
• Access to resources
• Export-led growth potential

14.2 Free trade: absolute and comparative advantage (HL only)

• Absolute advantage: ability to produce more of a good with the same resources
• Comparative advantage: ability to produce at a lower opportunity cost
• Specialization based on comparative advantage leads to mutual gains from trade
• Limitations: unrealistic assumptions (full employment, no transport costs, constant
returns)

14.3 Types of trade protection

• Tariffs: taxes on imports → higher prices, reduced quantity


• Quotas: limit on quantity of imports
• Subsidies to domestic producers: lower costs, make domestic goods more competitive
• Administrative barriers: health, safety, and environmental standards
• Exchange rate manipulation: devaluation to make exports cheaper

Unit 15: International Trade - Part II

15.1 Arguments for and against trade protection

• For: infant industry argument, national security, protection of jobs, protection against
dumping
• Against: inefficiency, higher prices for consumers, risk of retaliation, loss of export
competitiveness

15.2 Economic integration: trading blocs

• Preferential trading area → Free trade area → Customs union → Common


market → Monetary union
• Trade creation: switching from high-cost domestic to low-cost imports
• Trade diversion: switching from low-cost global to higher-cost bloc members

15.3 Economic integration: monetary union

• Common currency (e.g. Eurozone)


• Benefits: price transparency, no exchange rate risk, easier trade
• Costs: loss of monetary policy independence, fiscal rules, asymmetry in economic
shocks

15.4 World Trade Organization (WTO)

• Promotes free trade through negotiations and dispute resolution


• Encourages multilateral trade liberalization
• Critics: developed country dominance, limited enforcement power

Unit 16: Exchange Rates and the Balance of Payments

16.1 Floating exchange rates

• Determined by supply and demand for currency


• Influences: interest rates, inflation, speculation, trade flows, FDI

16.2 Consequences of changes in exchange rates

• Depreciation: exports cheaper, imports expensive → improved trade balance


(Marshall-Lerner condition)
• Appreciation: exports more expensive, lower inflation due to cheaper imports

16.3 Government intervention

• Managed exchange rates: occasional intervention to stabilize


• Fixed exchange rate: pegged to another currency
• Methods: using reserves, interest rates, capital controls

16.4 The balance of payments

• Current account: trade in goods/services, income, current transfers


• Financial account: investment flows (FDI, portfolio, reserves)
• Balance = current + financial + capital account
• Deficits may lead to currency depreciation

Unit 17: Further Topics on Exchange Rates and Balance of Payments (HL
only)

17.1 Current and financial account relationship

• Deficit in one → surplus in the other (mirror relationship)

17.2 Comparing exchange rate systems

• Floating vs fixed vs managed systems


• Pros/cons of stability, flexibility, and independence

17.3 Evaluating monetary union

• Similar to 15.3 but with added focus on economic convergence and policy
harmonization

17.4 Current account deficits/surpluses

• Persistent deficits → borrowing → debt burden


• Persistent surpluses → trade imbalances, reliance on exports

Unit 18: Understanding Economic Development

18.1 Sustainable development

• Meeting current needs without compromising future generations


• Incorporates environmental, social, and economic sustainability

18.2 Measuring development

• Indicators: HDI (health, education, income), GNI per capita, literacy rate
• Composite indicators more holistic than GDP alone
• Limitations: inequality, quality of life, data collection

Unit 19: Barriers to Economic Growth and Development

19.1 Poverty cycles (or traps)

• Low income → low savings → low investment → low productivity → low income

19.2 Economic barriers

• Inadequate infrastructure, education, health


• Dual-sector economies (subsistence vs modern)
• Capital flight, corruption, lack of credit access

19.3 Political and social barriers

• Poor governance, political instability, conflict


• Gender inequality, discrimination
• Cultural norms limiting economic participation
Unit 20: Strategies to Promote Economic Growth and Development

20.1 Trade strategies

• Import substitution vs export promotion


• Protectionism vs liberalization

20.2 Diversification and social enterprise

• Reducing dependency on commodities


• Encouraging local entrepreneurship

20.3 Market-based policies

• Free markets, deregulation, privatization


• Attracting FDI, lowering taxes

20.4 Interventionist policies

• Government provision of merit goods (education, healthcare)


• Progressive taxation and subsidies

20.5 Foreign direct investment (FDI) and MNCs

• Benefits: jobs, technology, investment


• Risks: profit repatriation, exploitation, limited local linkages

20.6 Foreign aid

• Types: humanitarian, development, bilateral, multilateral


• Tied aid vs untied aid
• Concerns: dependency, misallocation, conditionality

20.7 Multilateral development assistance

• IMF, World Bank, regional banks


• Large-scale infrastructure and reform funding

20.8 Institutional change

• Property rights, legal systems, anti-corruption, governance

20.9 Strengths/limits of government intervention vs market-oriented approaches

• Mixed strategies often most effective

20.10 Progress toward Sustainable Development Goals (SDGs)

• Assessment of targets in health, education, environment, etc.


• Importance of global cooperation

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