What this lesson teaches
I can explain how governments support people and firms to cope with the economic impacts of globalisation.
Syllabus K336, Issue 3, Guiding Question 2, Responses to economic impacts of globalisation. Government support
Make a guess
Singapore signs a free trade agreement that lowers import taxes with another country. Do you think every local firm will now succeed there?
- No, firms still need the right products, standards and buyers.
- No, because trade agreements add paperwork that makes exporting harder.
- Yes, because lower import taxes make local firms' goods sell well.
Show the answer
No, firms still need the right products, standards and buyers.
Agreements lower barriers, but firms must still compete. Help such as Enterprise Singapore's advice can make a difference.
Governments help firms and workers make the most of globalisation through trade agreements, infrastructure and help to reach overseas markets.
Picture a small producer whose product overseas customers want. But it lacks the knowledge or equipment to meet a foreign buyer's standards. Advice, testing facilities or help with costs can let it seize the opportunity.
Governments sign trade agreements, deals between countries that lower barriers such as taxes on imports. Singapore has signed many free trade agreements, which help its firms sell abroad.
Governments also build reliable ports, airports and digital networks, train workers and support new ideas in business. These help local firms compete and make Singapore attractive to investors. Enterprise Singapore helps local firms find overseas customers and partners and meet foreign standards. Having more markets and suppliers means firms rely less on any one of them.
Support uses public money, so it involves choices. A government grant is money given for an approved purpose, such as new equipment. Lower trade barriers also bring stronger foreign competition. A grant or agreement does not guarantee growth. Ask whether the support removes a real obstacle and leads to useful activity. The firm still has to sell something people want.
- Trade agreement
- An agreement between countries to reduce trade barriers.
- Enterprise Singapore
- Helps local firms grow and sell overseas.
- Limits
- Support costs money and does not guarantee success.
Real examples to use
Economic Development Board
The EDB attracts foreign companies to invest in Singapore, which creates jobs and business opportunities.
Free trade agreements
Singapore has signed many free trade agreements that lower barriers so local firms can sell more easily abroad.
Worked example: Meeting an overseas buyer's standards
An overseas retailer wants proof of food-safety testing before buying a Singapore firm's sauces. A government agency helps the firm get testing advice and pays part of the cost.
- The firm faced a real barrier: meeting foreign standards.
- Government help removes that barrier.
- The retailer still decides whether the quality, price and supply suit it. Government help creates a better chance, not a guaranteed sale.
Watch out for this
Signing a trade agreement makes every local firm successful.
Agreements open markets but also bring more competition. Firms must still compete.
Check your understanding
How does a free trade agreement help Singapore firms?
- It makes sure that Singapore firms win contracts in the partner country.
- It protects Singapore firms by keeping foreign firms out of Singapore's market.
- It lowers barriers such as import taxes, so selling abroad becomes easier.
Show the answer
It lowers barriers such as import taxes, so selling abroad becomes easier.
Yes. Lower barriers make exports cheaper and easier.