Benefits from International Trade 10 marks

Benefits of Trade Wider choice o Variety and quality Lower Prices o Causes higher PPP (big mac index) Differences in resources Economies of scale Increased Competition o Leading to greater efficiency Domestic production and consumption to increase as a result of specialisation o Which can lead to theory of comparative advantage Allows countries to acquire needed resources o E.g. Singapore Encourages inter-dependence between countries => reduces possibility of hostilities & violence. Can lead to Economic Growth

To what extent is it justifiable for Governments to resort to protectionism 15 Marks

How to answer: Define protectionism Types of proctectionism o Tariffs, quotas, subsidies, administrative barriers, health and safety, embargoes, environmental restraints, VER's Reasons for tariffs o Protects domestic industries from foreign competition o infant industries o Raises revenue for gvt o Anti-dumping measures o Domestic producers would benefit - recieve higher price & sell larger quantity. Leads to increased domestic employment.

cont. Reasons for other types of protectionism Reasons AGAINST protectionism o No consumer gain o Decreased efficiency - world price often lower than 'protected price' o Loss experienced by consumers is greater than gain had by producers o Income distribution worsens o De-skilling o Foreign producers are worse off o Global misallocation of resources o Less choice for consumers o Less competitiveness in export markets

Conclusion UP TO YOU :)