2013 HSC COURSE

developing economies - agriculture - primary. emerging economies - manufacturing - secondary. developed economies - services - tertiary

1. Global trade system 2. global financial architecture 3. global aid and assistance 4. global technology flows 5. domestic economies 6. domestic institutions in developing economies

1. high agricultural protection e.g. OECD total agricultural support 2012 US $250 billion e.g. 50% of farmers Y in Japan 2. Failure of WTO doha round Potentially it could have increase global economic activity by $520 billion by 2015 and lift >140 million people out of poverty (world bank estimates). 3. Expanding regional trade blocs 4. Dispute resolution process at WTO is expensive, complex and smaller countries are marginalised 5. WB 1% increase in admin costs lead to GWP decreasing by US $75 billion

1. FDI flowed tend to be directed at advanced economics e.g. 2011 LDCs received only 1% of total FDI. Majority of FDI goes to BRIC countries 2. increase in FDI and portfolio investmment has increased global economic volatility which hits developing countries more e.g. asian financial crisis. 3. international financial regulations are not up to date with globalisation - firms in advanced economies shift production and profits to avoid taxes while developing countries dont have the resources to do this 4. IMF serves advanced economies' interests as voting rights are based on contribution 5. developing nations large foreign debt e.g. 2010 - US $3.7 trillion

1. 2011 average aid given from advanced economies was 0.31% GDP when 0.7% was commited (only 58% given) 2. 1/6 of aid is phantom, 11% refinances past loans, 5% admin, and much is tied aid (purchase from adv economies) 2. aid often reflects military / strategic purpose

1. 'digital divide' - the uptake of new technologies is much faster in adv economies 2. developing economies cannot afford to produce their own technology as much is protected by IP rights 3. much of new technology is based on labour saving and health. Useless for developing economies who have an abundance in labour and main health risks are common infectious disease

1. dev economies are less abundant in resources 2. developing ecos has large labour but mostly unskilled + brain drain 3. dev little / no capital from I due to lack of national savings (from low Y) 4. dev dont have entraprenurial economy

1. often instable, corrupt, poor administration in dev 2. dev often have poor eco policy decisions sacrificing dev for growth

Asian countries are becoming more important e.g. china purchases 30% of australia X Asean 10% Japan 19%

record of all transactions between australia and the rest of the world. Composed of the Current Account and the Capital and Financial Account. BoP = CAD + KAFA +Net errors and omissions = 0

money flows from the balance of goods and service, Net primary income and net secondary income

sum of net goods and net services (X-M)

net earnings from invertments (interest and dividends)

any real or financial resources without a specific good or service provided in return

money flows from lending, borrowing, purchase and sale of assets. Includes the capital account and financial account

The worlds total amount of measurable economic activity including production, trade, investment, labour, financial flows, technology and economic behaviour in and between countries

measures the global economy by adding all of the world's economy's outputs. 1995 estimate US$33,644 billion. 2012 estimate $71,830 billion. Difficult to measure as: inflation rates vary by country, exchange rate differences, variation in asset value methodology, difference in tax policies

World trade allows the distribution of economic resourses (as factor endowments are not even) and the efficient production of goods and services (specialisation of countries in certain goods and services = efficient production)

pre 1700s - idea based upon needing to trade more X than M in order to build up a nation's wealth through the posession of prescious metals. However the global economy would stagnate if everyone X but nobody M

smith 1776 - All nations benefit from trade by specialising in goods and services that they can produce at a lower output price than other countries

ricardo 1800s - All nations benefit from trade by specialising in g + s that they have comparitive advantage in (produce at a lower opportunity cost)

1. specialisation can lead to economies of scale (lower unit cost and higher efficiency) 2. increased output and decreased cost may result in higher living standards 3. increased efficiency results in greater employment in X sectors 4. increased international competitiveness 5. firms have incentive to innovate to remain at a comparitive advantage 6. overcomes climatic and resourse deficiencies

1. infant industries may find it hard to compete 2. industries with comparative advantage may draw away resources from those without causing some regions to lose key industries and employment 3. free trade may lead to negative externalities 4. countries may become dependant on trade 5. may lead to dumping 6. may lead to a sustained CAD

The use of artificial barriers to protect industries from competition. includes: tarrifs, quotas, subsidies, local content schemes, technical standards, voluntary x restraints and anti dumping legislation

taxes on imports to increase the domestic price (thereby decreasing demand for m and increasing demand for local goods)

quantitave limits placed on the amounts of m allowed

payments made to domestic industries to increase the level of supply and decrease prices

requirements that a certain proportion of goods must use local materials

standards of labelling, packaging and safety