There are three main sections in this topic – (i) Exchange rates; (ii) Trade and Protectionism; and (iii) Globalisation. Some schools’ notes may also include BOP under this topic, although Mr Koh’s Economics tuition classes have subsumed it under the earlier topic on Macroeconomic Aims and Issues for ease of presentation. With the exception of sections relating to trade and protectionism, a large part of this topic leverages on students’ existing knowledge of macroeconomics.
For example, to understand how exchange rates change, students will need to tap on their existing knowledge of the causes of a BOP disequilibrium. In understanding how globalisation affects an economy, the focus is ultimately on the impact on the four macroeconomic goals.
Overlap Between Topics
In approaching the topic on International Economics, Economics tuition students should remember that a large part of the topic leverages on their existing knowledge of macro goals and policies. Economics tutor Mr Koh emphasises this point because students who fail to see this either spend a significant amount of time re-memorising content, or are confused over the overlapping concepts. Hence, the most efficient way to study starts with an identification of the content which are unique to this topic, and hence require more revision effort. They are:
(i) Theory of Comparative Advantage
(ii) Reasons for protectionism (including protectionistic methods, especially analysis of the tariff diagram).
(iii) Pattern of trade (can also be grouped according to demand and supply-side factors)
(iv) Trend towards globalisation
Other major content parts revolving around the effects of trade, exchange rate changes or globalisation can be regarded as a revision exercise on macroeconomics. As an extension, Economics tuition students should note that questions on Globalisation can veer into a discussion on the Competitiveness of an Economy. This is because like globalisation can affect an economy through the 3 channels of trade, capital and labour flows, A Level Economics examiners can also require students to assess how an economy can boost its competitiveness along these 3 channels.