Specialisation, free trade and globalisation
G3 Economics - syllabus K343, 2027
Why countries specialise and trade, globalisation and MNCs, and the methods, reasons and consequences of protection.
- Specialisation by country
Countries specialise in what they can produce best or at lowest cost, then trade for the rest.
- Free trade
Free trade means trade between countries without barriers such as tariffs and quotas.
- Globalisation: what it is and what causes it
Globalisation is the growing connection of the world's economies, driven by fewer trade barriers, cheaper transport and communication, and MNCs.
- The effects of globalisation
Globalisation increases trade and competition and can lift development, but it can harm the environment, widen income gaps and change who migrates.
- Multinational companies
An MNC operates in more than one country; it can bring jobs and investment to host countries but may also cause harm.
- Methods of protection
Governments protect domestic industries with tariffs, import quotas, subsidies and embargoes.
- Why governments restrict trade
Governments protect infant, declining and strategic industries, fight dumping, cut deficits, raise revenue and block harmful goods.
- Consequences of restricting trade
Protection can save some jobs at home, but raises prices, reduces choice and may provoke retaliation.
- Put it together: Respond to cheap imports
A country's domestic bicycle industry is losing sales to cheaper imported bicycles. Compare the government's options.
What you will be able to do
I can define specialisation by country, explain its basis, and weigh its advantages and disadvantages.
Syllabus K343, 6.1.1. Specialisation by country: definition of specialisation by country; the basis for specialisation by country in terms of the best resource allocation and/or low-cost; advantages and disadvantages of specialisation
Taught in Specialisation by country
I can define free trade and weigh its advantages and disadvantages.
Syllabus K343, 6.1.2. Free trade: definition of free trade; advantages and disadvantages of free trade
Taught in Free trade
I can define globalisation.
Syllabus K343, 6.2.1. Definition of globalisation
I can explain what changes globalisation and how those changes affect trade, competition, the environment, migration, incomes and development.
Syllabus K343, 6.2.2. Causes and consequences of changes in globalisation: causes of changes in globalisation: changes in trade restrictions, changes in transport costs, changes in communication costs, movement of multinational companies (MNCs); effects of changes in globalisation on: international trade, competition, the environment, migration, income distribution, economic development
Taught in Globalisation: what it is and what causes it, The effects of globalisation
I can explain the advantages and disadvantages of multinational companies for host and home countries.
Syllabus K343, 6.2.3. Role of multinational companies (MNCs): MNCs and their advantages and disadvantages to host countries and home countries
Taught in Multinational companies
I can describe tariffs, import quotas, subsidies and embargoes as trade restrictions.
Syllabus K343, 6.2.4. Types of trade restrictions / methods of protection: tariffs; import quotas; subsidies; embargoes
Taught in Methods of protection
I can explain the reasons governments restrict trade.
Syllabus K343, 6.2.5. Reasons for trade restrictions: protect infant (sunrise) industries; protect declining (sunset) industries; protect strategic industries; avoid dumping; reduce a deficit on the current account of the balance of payments; raise tax revenue; restrict the import of demerit goods; promote environmental sustainability
Taught in Why governments restrict trade
I can explain how trade restrictions affect the home country and its trading partners.
Syllabus K343, 6.2.6. Consequences of trade restrictions: impact of trade restrictions on the home country and its trading partners; advantages and disadvantages of restricting free trade
Taught in Consequences of restricting trade