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Prelim Revision

International Economics
Term 3 Revision Question 16
RI 2009 Prelims

International Economics RI 2009 Prelims


Prelim Revision

Singapores network of Free Trade Agreements has expanded to


cover 13 regional and bilateral FTAs with 23 trading partners,
including countries such as the US, China, India and Japan. FTAs

instrumental in helping Singapore based


businesses
strengthen
cross-border
trade
eliminating or reducing import tariff rates and
easing investment rules.
have been

Discuss the

extent to which Singapores network of FTAs will


help to achieve her macroeconomic objectives. [25]
TYPE of QUESTION: Linking International Economics and Trade
policies to macroeconomic objectives.

International Economics RI 2009 Prelims


Prelim Revision

Singapores network of Free Trade


Discuss the extent to which Singapores
Agreements has expanded to cover 13
network of FTAs will help to achieve
regional and bilateral FTAs with 23 trading
her macroeconomic objectives. [25]
partners, including countries such as the US,
Analysing the Question:
China, India and Japan. FTAs have been
Discuss the EXTENT
instrumental in helping Singapore based
businesses strengthen cross-border trade
-to judge the extent, you
eliminating or reducing import tariff rates and
need to make
easing investment rules.

Analysing the Preamble:


Recognise that this
Network of FTAs affects
- Trade flow
- Capital flow
- Labour flow

Instrumental to SG
- Why is FTA so
important for SG?
- Link to nature of SG
economy
- Any costs?

comparisons across the


4 Macro objectives

International Economics RI 2009 Prelims


Prelim Revision
CCCA
Outline
ACCA
Examiners comments
Detailed Answer

Command

Content

Context

Discuss the extent:


Provide alternative
perspective(s) to the
stated issue. Places
emphasis on more than
just having a two sided
discussion but also to
show the limit to which
an argument has validity
and include the particular
degree to which the issue
is believed to be the case .
To also include a reasoned
conclusion.

FTA how it works,


pros & cons. Go beyond
trade flows to include
capital & labour flows
as well.

Singapore To recognize
her unique
characteristics

Macroeconomic
objectives To bring in
the 4 macroeconomic
objectives.

Requires a general
understanding of SGs
relationship with the rest
of the world

Approach
Use of TAS to bring out the advantages and disadvantages of using FTAs to
achieve the various macroeconomic objectives set in the context of Singapore.
Synthesis requires a deliberate stance on whether the use of such a network
will benefit SG in the long run.

International Economics RI 2009 Prelims


Prelim Revision
Addressing question
requirements
Content Development
Contextualisation
Argument development

Hint:
It may look intimating to
have so many sections,
however this helps to
structure your points.
Thesis 2 and 3 need not
be explained in great
details.

Structure of Essay
Thesis 1: FTAs can help SG achieve her macroeconomic
objectives via Trade
Anti-thesis 1: FTAs cannot help SG achieve her objectives via
Trade
Thesis 2: FTAs can help SG achieve her macroeconomic
objectives via Labour flows
Anti-thesis 2: FTAs cannot help SG achieve her objectives via
Labour flows
Thesis 3: FTAs can help SG achieve her macroeconomic
objectives via Capital flows
Anti-thesis 3: FTAs cannot help SG achieve her objectives via
Capital flows
Anti-thesis 4: Other factors can help SG achieve her
macroeconomic objectives
Synthesis: Make a stand as to what extent will FTA benefit
SG in achieving her macroeonomic objectives.

International Economics RI 2009 Prelims


Prelim Revision
Essay flow
Addressing question
requirements
Content Development
Contextualisation
Argument development

Introduction
*Nature of Singapore Economy, *Meaning of FTAs
*Importance of FTAs to SG *List out the macro objectives
Body
Paragraph 1/2: Will FTAs help to achieve the objectives
via free trade? YES ; NO
Paragraph 3/4: Will FTAs help to achieve the objectives
via free capital flow? YES; NO
Paragraph 5/6: Will FTAs help to achieve the objectives
via free labour flow? YES; NO
Paragraph 7: What other factors are required to decide
the net benefits/harms from FTAs?
(*Some other policies that will maximise the benefits?)
Conclusion

**You may use the AD/AS diagrams to explain the benefits/costs of


FTAs

International Economics RI 2009 Prelims


Prelim Revision
Addressing question
requirements
Content Development
Contextualisation
Argument development
FTAs will lead to both
rise in exports and
imports
1) Use AD/AS analysis
to link to impact of
prices, national
income &
unemployment
2) Use current account
balance to link to
BOP

Body Paragraph 1
P: FTAs will help to achieve SGs objectives via free movement
of trade
E/E: Explain how free trade is achieved via FTAs and how that
is beneficial
-FTAs will lead to elimination of tariffs and other barriers that
restrict exports/imports by making them expensive.
-As Sgs export revenue increases, there will be an increase
the AD and hence a rise in real income via the multiplier
process. As Sg is an economy highly dependent on exports,
the rise in economic activity in the export sector will increase
demand for labour and lower unemployment
-Current account of Sg will also improve and the rising
demand for SGD will make the currency stronger
-the FTAs will also enable Sg to explore cheaper source of
imported raw materials which are crucial to Sgs economy due
to the limited domestic resource capacity. Cheaper resources
will lower the C.o.P and will make businesses more profitable
L: However, the rise in exports and imports may not
necessarily be beneficial

International Economics RI 2009 Prelims


Prelim Revision
Addressing question
requirements
Content Development
Contextualisation
Argument development

Body Paragraph 2
P: FTAs will not always help to achieve Sgs objectives via free
movement of trade
E/E: Explain how free trade is not beneficial
-the over-reliance on exports will make Sgs economic growth
vulnerable to the economic performance of the trading
partners. Also, the rapid growth of trading partners will lead
to fast rise in demand for Sgs exports (normal goods) and
thus AD, which may lead to demand pull inflation in Sg.
-the rise in imports may worsen the current account balance
and also make Sg vulnerable to imported inflation
-consumption of imports may be harmful for the growth of
the domestic industries and thus, be a threat to the future
capacity of the economy
L: Thus, to what extent Sg benefits from free trade (through
FTAs) will depend on various other factors (influenced by Sg
policies) that determine the net effects on (X-M)

International Economics RI 2009 Prelims


Prelim Revision
Addressing question
requirements
Content Development
Contextualisation
Argument development

FTAs will lead to both


rise inflow and outflow
of capital
1) Use AD/AS analysis to
link to impact of prices,
national income &
unemployment
2) Use finanacial account
balance to link to BOP

Body Paragraph 3
P: FTAs will help to achieve Sgs objectives via free movement
of capital
E/E: Explain how free capital flow is achieved and how that is
beneficial
-free capital movement is allowed by removing ownership
restrictions and restrictions on movement of funds. Attractive
tax regime aids to further facilitate this movement
-free movement of capital will allow for greater funds in Sg
and increases Investments (for example, FDIs of many MNCs
in Sg). This leads to rise in AD and brings about actual
economic growth in Sg. The investments may also help to
build the capacity and thus, aid in potential growth
-the rise in economic activity will increase the demand for
labour and lower UnN
-it also helps to improve the financial account and
strengthens Sgs currency
L: However, the free movement of capital may not necessarily
bring about benefits to Sg.

International Economics RI 2009 Prelims


Prelim Revision
Addressing question
requirements
Content Development
Contextualisation
Argument development

Body Paragraph 4
P: FTAs will not always help to achieve Sgs objectives via free
movement of capital
E/E: Explain how free capital flow is not beneficial
-too much FDI inflow may lead to demand pull inflation in the
short run in Sg. At the same time, it will make Sgs
performance dependent on the foreign investments.
-the strengthening of SGD may hurt Sgs export sector as
exports will lose competitiveness in terms of foreign currency.
This will be harmful for Sg, an economy predominantly
dependent on trade.
-Foreign investments may crowd out local potential investors
who may not be able to compete with established MNCs
already reaping IEOS
-the outflow of FDI from Sg may worsen Sgs financial account
in the short run
L: Although there are disadvantages from free capital flow,
Sgs small domestic investment size makes it important to be
open to foreign capital. Thus, good policies (other factors)
are required to maximise the gains

International Economics RI 2009 Prelims


Prelim Revision
Addressing question
requirements
Content Development
Contextualisation
Argument development
FTAs will lead to both
rise inflow and outflow
of labour
1) Use AD/AS analysis
to link to impact of
prices, national
income &
unemployment

Body Paragraph 5
P: FTAs will help to achieve Sgs objectives via free movement
of labour
E/E: Explain how free labour flow is achieved and how that is
beneficial
-free movement of foreign labour to Sg helps to overcome the
resource constraints by increasing the quantity of labour-both
skilled and unskilled. This helps to increase AS of Sg and
achieve economic growth.
-the labour flow will also help to lower the c.o.p especially in
the sectors which are labour intensive, for example,
construction sector. Whereas, the skilled labour will help to
improve the knowledge and technology intensive industries,
for example, Banking and Finance.
L: Thus, there will be overall growth in the availability of
resources. But, there may be potential threats too.

International Economics RI 2009 Prelims


Prelim Revision
Addressing question
requirements
Content Development
Contextualisation
Argument development

Body Paragraph 6
P: FTAs will not always help to achieve Sgs objectives via free
movement of labour
E/E: Explain how free labour flow is not beneficial
-Labour inflow will depress the wage rates, especially in the
labour intensive sector. Foreign labour may also replace the
local labour and thus, lead to the problem of resident
unemployment
-Singaporean skilled labour may move overseas and thus, the
brain drain may lower the future capacity of Singapore,
threatening her potential growth.
L: Overall, the extent to which Singapore will benefit depends
on the policies adopted to maximise the net gains.

International Economics RI 2009 Prelims


Prelim Revision
Addressing question
requirements
Content Development
Contextualisation
Argument development

FTAs will lead to both


rise inflow and outflow
of capital

Body Paragraph 7
P: The extent to which there is net benefit depends on the
policies that Sg adopt to combat the potential disadvantages
E/E: With regard to trade, Sgs constant effort to upgrade
export competitiveness by improving the quality of
goods/services, focus on tourism, strong currency to prevent
imported inflation etc. have enabled Singapore to ensure that
the potential threats can be easily countered
-With regard to free capital movement, Singapore has ensured
quality control in terms of the FDI that comes in to improve
the potential of Sg (focus on productive investments).
Providing good infrastructure and growth opportunities have
helped Singapore to attract FDI consistently
-With regard to labour movement, Singapore has revised the
foreign worker policies to moderate the numbers. To attract
the local talent Singapore govt. has focused on providing good
quality of live and security and various employment benefits.
L: Overall, the policies adopted have proved to ensure that
Singapore stands to gain more through the FTAs.

International Economics RI 2009 Prelims


Prelim Revision
Addressing question requirements

Addressing Question
Requirement

Did the answer


address the
direction and key
words?

L1 (1 9)

L2 (10 14)

L3 (15 21)

Answer is descriptive
and/or regurgitated
statements that are of
little relevance to
question requirement

Answer shows a
superficial knowledge
of the FTA and
candidate is only able
to apply it to explain
free trade

Thorough knowledge
of the FTAs and how
they work

Attempts to link to
Singapores
macroeconomic
objective are weak

Answer analyses the


overall benefit of FTAs
in the light of Sgs
macro objectives

Attempt to make a
comparison with other
factors/net benefit is
explicit and clear

International Economics RI 2009 Prelims


Prelim Revision
Content Development
L1 (1 9)
Content Development Points made are
not deliberately
Were points
supported with
made supported
diagrams and
with diagrams
economic theories:
and tables?
Were points
Mere stating of the
made supported movement of trade,
with economic
labour and capital
theories?
without any strong
attempt to link to
the objectives

L2 (10 14)

L3 (15 21)

Points are made and Points are made and


sometimes supported supported with diagrams
with diagram and
and economic theories:
economic theories:
Explanation of how FTAs
Incomplete economic work and their links to
analysis or
macroeconomic
inconsistent links
objectives are
made between FTA
consistently made.
and macroeconomic
objective

International Economics RI 2009 Prelims


Prelim Revision
Contextualisation

Contextualisation

Is there a context
to the question?
Were examples
used to support
given points?

L1 (1 9)

L2 (10 14)

L3 (15 21)

No/Little/Random
use of examples
that did not
support points.
Largely incidental.

Some attempt to
bring in nature of
SGs economy but
without much links to
points given.

Able to relate the


relevance of SGs unique
characteristics to her
need to establish such a
network of FTAs.

International Economics RI 2009 Prelims


Prelim Revision
Argument Development
Argument
Development
Did answer provide
balanced discussion
that considers
different
perspectives?
Was the flow of
argument coherent?

L1 (1 9)

L2 (10 14)

L3 (15 21)

A one-sided
answer on how
FTAs benefit
Singapore.

Some attempt to
look at benefits and
costs of FTAs to
Singapore.

Able to analysis the


effectiveness of FTAs
on various
macroeconomic
objectives of Singapore.
Considered other
perspectives such as
short and long term
effects, impacts on
labour & capital flows.

International Economics RI 2009 Prelims


Prelim Revision

Evaluative comments

Evaluation

E1

E2

No judgment is made to
answer question.

Overall stand is given to


address question. Stand is
also supported with
justification.

Was a relevant stand


provided?
Did the answer
attempt to justify the
stand made?

The evaluation adds value


to the overall answer by
exploring ways in which the
benefits can be maximised.

International Economics RI 2009 Prelims


Prelim Revision
Addressing question
requirements
Content Development
Contextualisation
Arguments Development

Conclusion + Evaluation
The network of FTAs provide both benefits and challenges.
However, the ability to retain the competitiveness of the
nation by keeping wage rates and general prices under
control, safe environment for productive investments and
allowing for the right amount of foreign labour, Singapore has
mostly benefited from the free trade policy.

Evaluation
Q1) Is the above the best way to conclude and warrant 4
marks?
To consider:
The unique characteristics of SG, our network of FTAs
arises more from need than choice.
This network can only benefit SG provided our internal
policies are sound.
The sustainability of maintaining such a network & to
continue to tap into this network to achieve our aims

International Economics RI 2009 Prelims


Prelim Revision
Addressing question
requirements
Content Development
Contextualisation
Arguments Development

Conclusion + Evaluation
The network of FTAs provide both benefits and challenges.
However, the ability to retain the competitiveness of the
nation by keeping wage rates and general prices under
control, safe environment for productive investments and
allowing for the right amount of foreign labour, Singapore has
mostly benefited from the free trade policy.

Evaluation
Q2) How else can evidence of evaluation be shown other than
an evaluative conclusion?
To consider the entire flow of the essay, whether your
theses are stronger/weaker than your anti-theses.

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