Summary IB Economics, Real World Examples Unit 4 (The Global Economy) for Paper 1
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Course
IB Economics
Institution
Complete list of real world examples covering the whole unit 4 of the IB HL Economics course. Excellent to use in Paper 1, for the 15-mark question, that requires to include examples from the real world. The document offers examples for all topics. The document was written in 2022, so most example...
to deregulate the transport industry, but in this case, related specifically to trucking. The
Act reduced price controls, entry requirements, and allowed greater freedom to the
regions and routes that truckers could take. Consequences: increase competition and
lower prices
Contracting out to the private sector:
- G4S is the world's 3rd largest private-sector employer, G4S employs over 155,000
people in the UK and in 2012 had a turnover of over £1.6 billion. It is one of the UK
government's largest providers of services such as manned event security, cash transfer
and security, monitoring prisoners and custodial & detention services as part of the
justice process.
Trade liberalisation:
- The EU has free trade agreements to varying levels with most other European
countries.
Labour market Reducing the power of labour unions:
Supply Side - Slovenia’s government weakened trade unions so much that it is now ignoring them,
policies causing riots
Abolishing minimum wages:
- Sweden is often touted as the poster-child for abolishing the minimum wage. minimum
wages are set by sector or industry through collective bargaining. Nearly all Swedish
citizens belong to one of about 110 trade unions and employers' organizations that
negotiate wage rates for regular hourly work, salaries, and overtime
- In February 2012, Greece implemented a 22%-cut in the minimum wage. This move
lowered labour costs, helping to increase the Short-Run Aggregate Supply of the Greece
economy.
Labour market reform:
- In light of the French Government's aims to boost efficiency, cut debt and reduce
unemployment rate, President Emmanuel Macron has implemented labour market
reforms (part of market-oriented SS-side policies). The government wants to end rail
workers' jobs-for-life, automatic annual pay rises and early retirement rights. Macron
said his ambition is to cut what he considers to be a bloated public sector and reform
France's relatively generous labour market. The Unions were unhappy with the use of
executive orders to force through changes and the removal of the benefits they have
been enjoying since the 1930s. Thus, they went on a strike in March 2018.
Reducing unemployment benefits:
- Austria, Belgium, Denmark, Finland, France, Germany, Iceland, Luxembourg,
Netherlands, Norway, Portugal, Spain, Sweden and Switzerland provide the most
generous unemployment protection systems
Interventionalist - Norway spends 7.6% of gov budget on education
Supply Side - Singapore offering Jobs Support Scheme to SMEs during Covid-19
policies - Supporting emerging industries: Pakistan is looking to double its IT industry in two
years by setting up dedicated tech zones across the country
Income and - US, 2020: richest 0.1% own over 20% of country’s wealth and top 1% owns over 40%
wealth of wealth. Three richest Americans held more wealth than the bottom 50% US
distribution population
- England: less than 1% owns more than half of England’s land (about 25000
landowners)
- World: top 1% owns half of the world’s wealth. The bottom 50% owns less than 2% of
the global wealth
Unit 4: Global Economy
International Trade
Benefits of Increased Welfare:
, International Japan is an excellent example of how the trade increased welfare and higher living
Trade standards.
Economies of Scale:
China gained economies of scale through international trade
Diversity of Choice:
Korean consumers are able to buy Apple products from US and have wide variety of
choice along their own electronics manufacturers Samsung and LG.
Increased Competition:
As Apple introduced the iPhone, Korean phone manufacturers such as Samsung and LG
began to make their own smart phones to counter the increasing Apple influence on
Korean domestic market.
Engine for Growth:
- Korea experienced enormous economic growth as they initiated trade with other
countries. As a result, the HDI, which indicates the living standards, increased ranking
12th in the world.
- With the signing of the EU Singapore Free Trade Agreement (EUSFTA) in October
2018, an influx of FDI into Singapore is expected. Firms, such as UK's Dyson and
Japan’s big shipping lines are relocating their head offices here in Singapore. The FTA
opens up new market opportunities for these firms, and in turn these FDIs will benefit
the Singapore economy.
Absolute - Saudi Arabia: oil
Advantage - United States has an absolute advantage in the production of copper wire
Comparative - Ireland has a comparative advantage in cheese and butter due to climate and a large
Advantage amount of land suitable for dairy cows.
- China has a comparative advantage in electronics because it has an abundance of labor
Tariffs - In March 2018 President Trump imposed tariffs on steel (25%) and aluminum (15%)
from most countries President Trump raised tariffs on imports of many Chinese goods
such as fridges, washing machines and clothes. China retaliated by placing tariffs on US
agricultural exports, like soy.
- consequences: loss of US jobs (higher costs of imported inputs, relocation of US firms)
- in 2018 - China increased car tariff for US from 25% to 40%
Quota - Eu quota on 20% imported Japanese cars
- 12 countries are eligible to ship fresh or frozen beef to the United States: Australia,
Canada, Chile, Costa Rica, Honduras, Ireland, Japan, Lithuania, Mexico, New Zealand,
Nicaragua, and Uruguay.
- To protect domestic sugarcane and sugar-beet farmers, the United States imports sugar
under a system of tariff-rate quotas (TRQ)
Subsidy/Export - China's government provides a wide range of incentives to encourage firms to produce
subsidy almost exclusively for the foreign market
- While countries may choose their own import tariff binding level in exchange for con-
cessions, export subsidies are completely prohibited, with few exceptions
Administrative - EU, health and safety requirements as well as packaging and labelling requirements
Barriers - French Government ordering all Japanese video imports to be inspected in Poitiers
(French city) - took too long etc. + effectively reduced imports
Preferential Bilateral: Australia + New Zealand, Australia + Japan, India + Afghanistan, Morocco +
Trade Egypt, Pakistan + Sweden
Agreements
Trading Blocs Free Trade Area:
The North American Free Trade Agreement (NAFTA)
Association of Southeast Asian Nations Free Trade Area (AFTA)
Customs Union:
European Union Customs Union
Southern African Customs Union (SACU)
Common Markets:
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