What students need to learn:
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Content
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Students should be able to:
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Additional Guidance Notes
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Patterns of trade
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Identify patterns of trade between developed and developing
countries.
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Students should be aware of changes in trade flows between countries
and the reasons for them, for example the potential impact of China and India
on world trade patterns and the possible reaction of developed economies.
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Specialisation and comparative
advantage
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Understand the benefits and costs of specialisation and trade; the
law of comparative advantage.
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Students should understand the distinction between absolute and
comparative advantage. The significance of opportunity cost should be
emphasised. Comparative advantage may be illustrated numerically and diagrammatically.
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WTO
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Understand the role of the World Trade Organization (WTO) in trade
liberalisation; trading blocs.
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The distinction between different types of trading blocs should be understood.
Possible conflicts between trading blocs and the WTO should be considered.
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Restrictions on free trade
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Identify potential restrictions on free trade: reasons and types for
example, tariffs, quotas, non-tariff barriers, subsidies to domestic
producers.
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Diagrammatic representation of tariffs is required (to include
welfare changes and government revenue).
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Protectionism
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Identify potential effects of protectionist policies on resource allocation.
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Students should examine cases of protectionism currently in the news.
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