Examination Perspectives for students (Economics tuition bukit timah programme) – International Economics
Instead of asking students to weigh the benefits of trade against protectionism (which usually requires a discussion of the Theory of Comparative Advantage and other gains from trade against the justifiable and non-justifiable reasons for protectionism), some questions may require students to analyse whether protectionism can be justified given the trend towards globalization. In such cases, the essay is usually centred on assessing the performance of an economy (i.e. the 4 key economic indicators), given the backdrop of globalisation. Hence, the essay will typically consider the following points:
How globalisation improves an economy’s KEIs
Based on points generated under 4-3-2 approach. Students under Mr Koh’s economics tuition at Bukit Timah can refer to page 204 of his guidebook.
To recap, since globalisation is a wide topic, economics tutor Mr Koh’s students can adopt a 4-3-2 approach to understanding its application more succinctly.
Students are often asked to assess the impact of globalisation on the 4 macro goals (jointly or separately). Occasionally, they may be asked to consider the impact on equity and living standards as well.
The impact of globalisation is felt through 3 channels – greater flow of
(i) goods and services (aka trade);
(ii) capital (including both hot money and longer-term FDI); and
In considering the challenges posed by globalisation, there are two themes to observe: 2 way traffic and greater reliance translating into greater vulnerability
Challenges brought about by globalisation and the role of protectionism
Given that globalisation represents a 2-way traffic, competition can intensify. Protectionism in the form of tariffs can shield an economy (temporarily) from external competition, which helps to alleviate problems associated with unemployment, growth and the BOP.
Limitations of protectionism
Economics tuition bukit timah students can use the W-RGD framework, i.e.
- worsening of problems with retaliatory moves by trading partners.
- root cause of economic problem is unaddressed e.g. poor quality competitiveness
- gains from trade are compromised (refer to Theory of CA and other gains from trade)
- deadweight loss resulting from protectionism – revise tariff diagram
Other policies to alleviate challenges of globalisation
Various supply-side and demand-side policies