Development economics

Table of Contents

1. Topic pack - Development economics - introduction
2. 4.1 Economic development (notes)
3. 4.1 Economic development (questions)
4. 4.2 Measuring Economic Development (notes)
5. 4.2 Measuring development (questions)
6. 4.3 The role of domestic factors in economic development (notes)
7. 4.3 The role of domestic factors in economic development (questions)
8. 4.4 The role of international trade (notes)
   1. Role of international trade - introduction
   2. Trade problems (LDCs)
   3. Problems - over-dependence on primary products
   4. Price volatility of primary products
   5. Consequences of price volatility
   6. Price increases can also be problematic!
   7. Price volatility case study - tomatoes
   8. Price volatility case study - copper
   9. Trade strategies for growth and development
   10. Import substitution
   11. Import substitution case study - sorghum
   12. Export promotion
   13. Export promotion case study - Thai toy industry
   14. Trade liberalization
   15. The role of the World Trade Organization
   16. Background information
   17. The Doha round
   18. Case study - trade sanctions
   19. Bilateral and regional preferential trade agreements
   20. Case study of a bilateral preferential trade agreement
   21. Case study of a multilateral preferential trade agreement
   22. Some background reading
   23. Diversification
   24. Case study - diversification
   25. Diversification in Malawi - video
   26. Some background reading
9. 4.4 The role of international trade (questions)
10. 4.5 The role of Foreign Direct Investment (FDI) (notes)
11. 4.5 The role of foreign direct investment (questions)
12. 4.6 The role of foreign aid and multilaterial development assistance (notes)
13. 4.6 The role of foreign aid and multilateral development assistance (questions)
14. 4.7 The role of international debt (notes)
15. 4.7 The role of international debt (questions)
16. 4.8 The balance between markets and intervention (notes)
17. 4.8 The balance between markets and intervention (questions)
18. Print View

Syllabus: With reference to specific examples, evaluate each of the following as a means of achieving economic growth and economic development.

(e) Bilateral and regional preferential trade agreements

Prior to reading this section, you are advised to review Section 3.4 on Economic Integration

The principle of comparative advantages explains the potential gains to trading partners from freeing up trade by removing barriers, such as tariffs and other forms of protectionism. A liberalisation strategy to trade results in countries engaging in different degrees of economic cooperation and integration.

World Customs Unions

Economic integration can take a number of different forms including establishing a preferential trading area, free trade area, monetary union, customs union, common market, economic union, customs and monetary union and economic and monetary union (review Syllabus area 3.4 International Economies)

This section focuses on how less developed countries attempt to stimulate trade and benefit from economic integration. Many less developed countries have set up preferential trade agreements in an attempt to free up trade between participating members.

Preferential trade agreements can be either bilateral or regional:

• Bilateral trade agreements exist where two countries establish a preferential trade agreement between themselves.
• A regional trade agreement is a multilateral arrangement that exists between a number of countries in a geographical region. Regional trade agreement are sometimes referred to as 'trading blocs'. These provide for preferential access to certain products from participating countries by reducing (although not abolishing) tariffs. The establishments of regional trade agreements are often the first stage of economic integration prior to becoming a free trade area.

Preferential trade agreements have created numerous departures from the most favoured trading nation (MFN) principle of the World Trade Organization, where members are expected to apply the same tariffs to imports from other WTO members.

Note the command word EVALUATE in the syllabus statement so a Data Response Question could be about this:

For example:

Nov 2012

Q5d Using information from the text/data and your knowledge of economics, evaluate the likely effects of Malawi’s trade and development agreement with the EU.                                                                     [8 Marks]

Example 2:

Nov 201

Q4d Using information from the text/data and your knowledge of economics, evaluate the consequences of the Thailand-China free trade agreement (FTA) on Thailand’s growth and development.